NC State Ag Economist Dr. Mike Walden – “Time of Day Pricing”


Mary:  I’m Mary Walden, with economist MW, welcoming you to the economic perspective.   Today’s program looks at time of day pricing.  Mike, electricity is a unique type of product.  Because it is difficult to store, capacity must be built to supply the highest usage.   Is there a way to reduce this peak capacity voluntarily by users?

Mike:  Summary Answer

  1. yes, it’s called time of day pricing
  2. rather than charge a constant price, charge a higher price when usage is high

and a lower price when usage is low

  1. therefore get users to shift usage away from peak times – this therefore reduces

needed peak capacity, meaning need fewer expensive generating plants

  1. problem – few people choose to do this
  2. option – make time of day pricing the default, so must opt out
  3. in communities where this has been done, electric bills have gone down by

10% to 20% because use less, and people have come to like it

  1. I’m MW

Mary:  And I’m Mary Walden for N C State Extension