Carrots, Sticks and Other Smart Tricks Seth Blumsack Penn State - - PowerPoint PPT Presentation

Carrots, Sticks and Other “Smart” Tricks

Seth Blumsack Penn State University and Santa Fe Institute

Other people whose tricks make me look smart: Paul Hines, Jason Clothiaux, Suman Gautam, Roger Mina Support from DOE and Green Mountain Power (nee Central Vermont Public Service)

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Carrots for Smart Grid Tricks!

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• Research funded through a

Smart Grid Investment Grant(SGIG) program to eEnergy Vermont, a utility consortium.

• SGIG provided substantial

ARRA funding for “smart grid” deployment, but DOE dangled carrots in front of utilities who were willing to conduct “consumer behavior studies.”

Carrots for Smart Grid Tricks!

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Download our reports here: https://smartgrid.gov/project/vermont_transco_llc_eenergy_vermont.html

Carrots and Sticks

4 Source: Sanem Sergici, Brattle Group

eEnergy Vermont Experiment

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eEnergy Vermont Experiment

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• RCT involving 3,735 GMP residential customers in Rutland;
• Opt-in to enroll; opt-out at any time;
• Event-based study with 24-hour notification of “peak days,” rate

treatments: peak pricing, peak rebates and a transition group who started on a rebate and were moved to peak pricing;

• Tech and no-tech groups;
• Notification mode choices (phone, e-mail, text message);
• Detailed pre/mid/post study surveys.

eEnergy Vermont Experiment

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eEnergy Vermont Experiment

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Rate/Information-Treatment Technology-Treatment IHD No&IHD IHD No&IHD IHD No&IHD Flat&Rate&w/Notification No&IHD Flat&Rate&w/o&Notification No&IHD Critical&Peak&Price&(CPP) Critical&Peak&Rebate&(CPR) CPR&in&Year&1,&CPP&in&Year&2

~ 4,000 customers involved in the pilot. A “Hawthorne” group was created but no Hawthorne effect detected.

!$(0.70)! !$(0.60)! !$(0.50)! !$(0.40)! !$(0.30)! !$(0.20)! !$(0.10)! !$.!!!! !$0.10!! !$0.20!! 1! 2! 3! 4! 5! 6! 7! 8! 9! 10! 11! 12! 13! 14! 15! 16! 17! 18! 19! 20! 21! 22! 23! 24! Rate%($%per%kWh)% Regular!Rate! PTR!credit!

The Carrot: Critical Peak Rebates (CPR)

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Consumers are given a credit for measured reductions in electricity use during declared peak periods

!$#!!!! !$0.10!! !$0.20!! !$0.30!! !$0.40!! !$0.50!! !$0.60!! !$0.70!! 1! 2! 3! 4! 5! 6! 7! 8! 9! 10! 11! 12! 13! 14! 15! 16! 17! 18! 19! 20! 21! 22! 23! 24! Rate%($%per%kWh)% Regular!Rate! CPP!Rate!

The Stick: Critical Peak Pricing (CPP)

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Electric rate increases during declared peak periods, but is slightly lower (relative to flat- rate) during all other periods.

In Home Device (Circa the Stone Age)

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CPR, CPP and GMP

• Some utilities have run pilot

programs that use peak-time

• rebates. Others have used

critical-peak pricing.

• GMP was convinced to do
• both. This made their state

regulator confused, and a little

• irritated. Aren’t peak prices

and peak rebates basically the same thing? Why punish the poor people of Vermont?

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Image source: NPR

Framing Gains and Losses

“The aggravation that one experiences in losing a sum of money appears to be greater than the pleasure associated with gaining the same amount.” - Kahneman and Tversky, 1979

13 Graphic: Annika Todd, LBNL

• Avoiding a loss is

somehow preferred to achieving a gain that is identical in magnitude.

• Suggests that we should

expect larger savings from CPP than CPR

• Can ratepayers be trained

to like the stick?

Data and Estimation

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) yit = β + β jTij

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• 15-minute interval meter data for several thousand GMP

residential customers in Rutland

• Plus some socio-economic data (house size, appliance stock,

income, education, household size, etc)

Weekday Load Shapes

Blumsack, 11 Aug 2010 15

Event-Day Behavior, 2012 and 2013

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IHD Customers, 2012 Non-IHD Customers, 2012 IHD Customers, 2013 Non-IHD Customers, 2013

Average Peak Time Load Reductions

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!0.16& !0.14& !0.12& !0.10& !0.08& !0.06& !0.04& !0.02& 0.00&

Average'Hourly'KW'Difference'During'Event' Hours'(Treatment':'No:No<fica<on'Control)' CPR' CPR+IHD' CPP' CPP+IHD' Flat'Rate'w/ no<fica<on' 5.3%& 7.4%& 14.1%& 7.3%& 6.5%&

Before/During/After Event

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Monetary Savings

Blumsack, 11 Aug 2010 19

So, What Did We Learn?

20 Source: Sanem Sergici, Brattle Group

Capacity Value of Retail DR

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!50%% !40%% !30%% !20%% !10%% 0%% 10%%

1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14%

Flat%Rate%w/No8fica8on% CPR!CPR% CPR!CPR%w/IHD% CPP!CPP% CPP!CPP%w/IHD% CPR!CPP% CPR!CPP%w/IHD% 2012%Events % % % %2013%Events% %%9/12%%%%%%%%9/21%%%%%%%%9/25%%%%%%%%%10/5%%%%%%%%7/5%%%%%%%%%%7/15%%%%%%%%7/16%%%%%%%%7/17%%%%%%%%7/18%%%%%%%%7/19%%%%%%%%8/13%%%%%%%8/21%%%%%%%%8/22%%%%%%%%%8/28% %%%%78°%%%%%%%%%%%69°%%%%%%%%%%65°%%%%%%%%%%%%70°%%%%%%%%86°%%%%%%%%%%%%88°%%%%%%%%%%87°%%%%%%%%%%%89°%%%%%%%%%%87°%%%%%%%%%%%90°%%%%%%%%%%68°%%%%%%%%%82°%%%%%%%%%%%82°%%%%%%%%%%%%83°%

How Not to be Popular!

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100 200 300 400

• No. of customers

4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 9/13 20 40 60 80 100 Percent Month CPR CPR+IHD CPP CPP+IHD CPRCPP CPRCPP+IHD Control

How Not to be Popular!

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100 200 300 400

• No. of customers

4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 9/13 20 40 60 80 100 Percent Month CPR CPR+IHD CPP CPP+IHD CPRCPP CPRCPP+IHD Control

Who dropped out???

• Receive Peak-Time

Notification by Phone

• Younger Customers
• Large Households

How Not to be Popular!

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100 200 300 400

• No. of customers

4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 9/13 20 40 60 80 100 Percent Month CPR CPR+IHD CPP CPP+IHD CPRCPP CPRCPP+IHD Control

Period of interim surveys

Actions Reported

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% CPR CPR+IHD CPP CPP+IHD Flat7Rate7 w/Notification Proportion(of(Customers(Who(Reported(Taking(Each(Action Thermostat7Settings Turn7off7Lights Appliance7Timers Delay7Laundry Delay7Cooking Adjust7Air7Conditioning

Efficacy-Popularity Frontier

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0% 2% 4% 6% 8% 10% 12% 14% 16% 0% 5% 10% 15% 20% 25% Average Peak Time Demand Reduction Proportion Viewing Pilot Favorably CPP + IHD CPR Notification Only CPP CPR + IHD

How Do Consumers Value Smart Grids?

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Monetary Savings 41% Like Conserving Energy 14% Like the IHD Technology 5% Improvement in Service 40%

“They knew where we were when we had power outages”

• -GMP customer

(without IHD)

Words Are Worth a Thousand Pictures

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CPR Customers CPP Customers

Utility Lessons

Sticks work better than carrots… Customers DO respond to incentives… Information CAN be useful…

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…but sticks are unpopular, especially after dangling carrots before customers/regulators. …but not persistently enough to have much (retail) capacity value. …but the supporting systems need to become as EASY as making coffee.

A Final Musing

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• Why do households

care about the carrot

• r the stick?
• GMP customers each

saved tens of cents during every peak event!

• What motivates

customers? Does the penny make the conservation choice more or less complicated?

Thank You!

Seth Blumsack blumsack@psu.edu

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