say you gave all americans their first 500kwh of electricity free each month

November 2, 2010 2:16 PM

say you gave all americans their first 500kwh of electricity free each month (typical household uses 1000). beyond that, each kwh is billed at 3x the current (tee-hee) price. would people's usage/behavior change?

for the purposes of this discussion, please assume that no new power generation capability will come online (no thorium reactors, magic solar roadways, etc.).

everyone wants power at 3pm. almost no one does at 3am. load balancing is a challenge, wind and solar are 'bursty' and thus difficult to implement w/o storage. conservation is often ignored, but as i see it, it is the most immediately effective solution we have.

optional: in addition to the first 500kwh free, electricity consumed between midnight and 6am would cost 1x the current rate.

your thoughts please.

posted by kimyo to Society & Culture (15 answers total)

I don't think that people really connect turning on that microwave and a spike in their power bill. There's no immediate negative feedback. I really think that the best way to remind people to cut back power is to have an immediate reminder.
posted by Stagger Lee at 2:21 PM on November 2, 2010

The current system actually encourages higher usage. I pay something like $20 for the privelige of having an account with ComEd, and about $10 for using electricity.
posted by goethean at 2:22 PM on November 2, 2010

Sorry...hit "Post" too soon. My point was that there is probably a reason related to the finances of utility companies why the current system is the way it is.
posted by goethean at 2:23 PM on November 2, 2010

Obvious problems: typical family sees 50% cost increase, with an even more complicated billing system. Your optional idea requires smart metering, which doesn't have the market penetration required in the US
posted by JMOZ at 2:25 PM on November 2, 2010

Utility regulation doesn't work this way. If you forced regulated utilities to charge a set price 3x above current rates (usually determined either by the market or fuel costs * efficiency+costs+ RoR) the first thing that would happen is unregulated utilities coming in to sell power at big profits. You'd end up turning it into a handout for those guys. The market already attempts to match cost with demand. Better to put a cost on generation externatlities that the utilities pass through to customers and/or tax subsidies for conservation. Your plan is a really clunky attempt at price controls which almost never work.
posted by JPD at 2:25 PM on November 2, 2010

Response by poster: we already have multiple rate billing for electricity, we wouldn't need smart meters. in any case, let's say the utility companies serve the nation, and that they will accept the plan.

will people's behavior change, that's the question.
posted by kimyo at 2:31 PM on November 2, 2010

I use less than 200kwh each month living alone in a small apartment. If I were given 500kwh for free, I probably would use more electricity. I probably use more electricity now than I used to, since I'm kind of annoyed that my provider is charging me a higher rate than heavy consumers.
posted by Thoughtcrime at 2:32 PM on November 2, 2010

This sounds very similar to the tiered pricing in many developing countries with challenging infrastructure thus inability to offer non stop high loads throughout the day. People tend to conserve more, or use alternate energy sources such as diesel generators if they can afford it (during peak hours when there are often brownouts) or juggling usage against cost of fuel (kerosene subsidised, firewood often free, electricity paid for in advance etc)

However, the caveat is that these environments have always tended towards variance of delivery and scarcity so conservative behaviours are ingrained, whereas what you are suggesting is a behavioural change to be implemented purely by pricing rather than any further combination of elements.
posted by The Lady is a designer at 2:35 PM on November 2, 2010

If you're looking for data, the closest comparison I can think of is air time on mobile phones. There's probably some results there showing how it affected people's behaviors, and how much more air time people used once they exceed their plan.

Stagger Lee above has a good point about necessary feedback, as it's hard to connect cause and effect in electricity use. If your microwave said "nuking this burrito for 1 minute will cost you $0.01" and your dryer "drying this load will cost you $0.05" then I could believe it having a significant effect. (As you can also see, I don't really have a good sense at all as to what the cost of running these appliances are).

There is also an old article on the NYTimes about people who use EZPass to pay for tolls paying less attention to how much they are spending.
http://freakonomics.blogs.nytimes.com/2009/10/28/a-defense-of-irrational-taxation/

So triangulating these pieces together, I'd say that if people are aware of cause and effect with respect to their behavior and prices, I'd answer "yes" to your question.
posted by jasonhong at 2:36 PM on November 2, 2010

jasonhong: In the microwave case: a 1000-watt microwave, at 15 cents a kilowatt-hour, will cost $0.01 per four minutes. I can't imagine knowing this number makes a difference - what, am I not going to microwave a couple bucks worth of food because it'll cost another cent?

This sort of feedback might work for clothes drying, though. An electric dryer uses 4400 watts; at an hour a load and 15 cents a kilowatt hour that's 66 cents. I think for some people that might be enough to get them to hang-dry instead.

The fact that your numbers are so far from reality is not your fault, though; we really don't have these sorts of numbers internalized. But the big energy users are generally heating (over long periods of time, so microwaves don't really use a lot but ovens do) and cooling.
posted by madcaptenor at 2:49 PM on November 2, 2010

Response by poster: >with an even more complicated billing system
i don't see that the first 500kwh free makes for a more complicated system. how many pages is your current bill these days? could it be more complicated?

>I wonder what the motivation of the question is?
i'm wondering if there is any way to cause a group shift towards conservation. if many people began conserving, we might be able to divert funds now headed for generation (ie: coal, 'clean' coal) into improving grid quality and safety.

>If I were given 500kwh for free, I probably would use more electricity.
would you see your usage increase by 100kwh/month? more? might you buy more electronics, or choose cheaper/less efficient options?

noted on the ezpass/cell phone usage observations. but wouldn't the expense of the 501st kwh serve to make people more aware, rather than less so?
posted by kimyo at 2:49 PM on November 2, 2010

I'm no expert, but I would assume that behavior would not change. Most people aren't just going around using electricity because it's fun; it still costs money to use more power. We see an impact on our pocket books when we use more electricity, and nearly everyone wants to save money. I guess I'm saying that the incentive is already there to use less, and I think the 500k free kwh would be seen more as just another line item on the monthly bill.

I would assume that the problem is that we don't see an immediate cost when we turn on the heater or turn our fridge down to the coldest setting. I don't know how it could be done, but I think having a monetary cost displayed immediately and directly to the user of an appliance would have the most impact on power usage.
posted by Willie0248 at 2:51 PM on November 2, 2010

When I lived alone in a small one-bedroom, I generally used about 100 kWh during non-air-conditioning seasons; I think the biggest summer electric bill I got was in the neighborhood of 250 kWh. I'm not sure how I could have used 500.

And I don't think I was atypical here. Electric usage is going to vary a lot based on household size and any credit such as the one you suggest would have to take that into account. (Although it reasonably couldn't -- how would the electric company know how many people live in your house?)
posted by madcaptenor at 2:52 PM on November 2, 2010

When gas got very expensive ($4 a gallon) people did change their driving habits somewhat. But as soon as the price went back down and/or people got used to gas eating up more of their budget, the driving habits went back up.
posted by maryr at 3:05 PM on November 2, 2010

Where I live, they have a punitive summer charge. So up to a certain amount (well under the average usage) we get charged one amount, and over that usage we get charged double. This only happens during the summer months. Our usage didn't change at all in large part because there was no possible way that we could ever stay within the first tier payment usage--we don't even have an air conditioner and we never once came close to staying under the tier 1 usage. There were reports on the local news about people who had spent thousands of dollars trying to make their homes as energy efficient as possible and still couldn't make it under the tier 1 usage.

I feel like that might be an issue with what you're proposing as well. It would probably just serve to make the utility companies richer and become a hardship on the average household.
posted by Kimberly at 3:05 PM on November 2, 2010