Utility customers overestimate cost savings with energy-conservation plans

From Eurekalert

Public Release: 3-Dec-2018

Study: Decisions to stay in programs hinge on perception, not reality

Ohio State University

COLUMBUS, Ohio – When deciding whether to participate in programs designed to conserve energy during peak hours, consumers appear to rely more on their intuition about how much money they’re saving rather than on proof their bills are smaller, a new study has found.

Actual savings for utility customers who participated in a program that encouraged thoughtful energy usage – things like running loads of laundry during non-peak times and turning off the air conditioning during peak evening hours – was real, but minimal, the study found.

“What really prompted customers to decide whether they wanted to stay in the program was their perception of how much money they were saving – not so much actual savings,” said study author Nicole Sintov, assistant professor of behavior, decision making and sustainability at The Ohio State University.

“People thought they were saving more than they were, and they were making decisions to renew the program based on these ideas, not on real savings. These are surprising results, and could suggest that there’s a disconnect that could undermine the goals of these programs.”

The study appears today (Dec. 3, 2018) in the journal Nature Energy.

Sintov worked on the research with Lee White, who is a postdoctoral researcher at Ohio State.

The basic concept behind time-of-use programs is that you pay more for energy when it’s in highest demand, and less when usage typically dips. The idea is to better align supply and demand – for instance, shifting more use to daytime hours when solar energy is available and use typically decreases. Rates can vary based on time of day, day of week and season.

This study and others show that the programs are effective.

That’s good news in terms of energy conservation, but it’s important to understand what motivates utility customers to remain enrolled in these programs and whether their expectations line up with reality, Sintov said.

“Our study seems to indicate that many consumers have a faulty impression about their savings, and that the faulty impression is prompting them to stick with the program.”

The study included 8,702 customers of a large power utility in the southwestern United States. The researchers do not name the utility in the study, at the company’s request.

The households were randomly assigned to one of three time-of-use rate programs, or to a control group that remained on their normal rate during a 12-month pilot of the program.

After several months of experience with the pilot, participants were asked to fill out surveys in which they were asked about their willingness to stay on the plan after the pilot. In the survey, researchers also asked questions exploring other variables including perceived savings, perceived ability to reduce on-peak use, perceived understanding of rates and actual understanding of rates.

Though consumers may be motivated by environmental stewardship and other factors aside from savings, the perception that their changing energy-use choices was having a significant impact on their budgets proved to be key to whether or not a customer wanted to continue in the time-of-use program.

Previous research has shown that customers in general have a poor understanding of their electricity use and bills and that disconnect is likely at play here, Sintov said.

“They may be thinking, ‘I made all these efforts, things like turning off my lights, so I must be saving money,’ when in reality what they’re doing is barely moving the needle on their usage or bills,” she said.

The study found other mismatches in the influences of perceptions versus reality on program acceptance. The more informed consumers were in terms of the actual rate structure, the less likely they were to want to stay in the program. On the other hand, the more consumers thought they understood the rates, whether or not they really grasped them all that well, the more inclined they were to renew.

Sintov said it’s important for consumers considering participation in time-of-use programs to be aware that perceptions about energy usage and cost savings might not be realistic.

“It’s a good idea to actually look at your bills and your usage patterns to see what’s happening in your household,” Sintov said.


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December 6, 2018 10:11 pm

Nature responds to whatever is the case.
Humanity responds to whatever it perceives to be the case.

Which is why the advertising industry exists.

old white guy
Reply to  Leo Smith
December 7, 2018 5:29 am

When I worked in sales the company owner always said perception is reality.

Clyde Spencer
Reply to  old white guy
December 7, 2018 3:03 pm

old white guy
But the truth is, perception is only pseudo-reality. And, Nature has a way of making that deadly obvious.

Steve Reddish
December 6, 2018 10:42 pm

“What really prompted customers to decide whether they wanted to stay in the program was their perception of how much money they were saving – not so much actual savings,”

The question is – Why did they think they were saving more money than was actually the case? Did the utility provider oversell the savings customers would see? Surely people didn’t just assume what their savings would be. Checking for themselves would be complicated by seasonal changes during the test period. I imagine most people felt they could trust the utility service’s math.

This is similar to claims of CAGW. People assume they can trust climate scientist’s math.


Steve Reddish
Reply to  Steve Reddish
December 6, 2018 10:59 pm



Reply to  Steve Reddish
December 6, 2018 11:31 pm

a climate scientist’s

December 6, 2018 10:43 pm

Currently auditing a property where they converted to all LED lighting. The electric utility estimated large savings, but failed to properly account for the winter heating penalty. Due to the specifics of their heating system, their total energy costs INCREASED.
And their tenant comfort decreased…
The owner, utility, contractor, and green consultants loudly claimed the project a success.
As for me and my analysis, I will most likely get kicked off the project for revealing the issue.

Bruce Cobb
Reply to  Energy-Guy
December 7, 2018 5:40 am

To be fair, though, was the summer cooling gain also considered?

Reply to  Energy-Guy
December 7, 2018 7:19 am

Been there done that and there wasn’t even any stinkin’ t-shirt!

L Griffiths
Reply to  Energy-Guy
December 7, 2018 7:02 pm

Not actually possible to have this happen unless your building heating system is a wildly inefficient P.O.S. So, maybe take a look at that. Incandescent lightbulbs are just tiny little resistance heaters, located mostly in the ceiling space so while they do create heat, and there will be interactive effects like higher space heater load, those increases in costs can only be if you traded your crummy heating system ( the lightbulbs) for a truly horrible one. Fix the real problem, rather than complain about the installation, which at worst, only uncovered it.

Roger Taguchi
December 6, 2018 10:49 pm

In Ottawa Ontario, we’ve had smart meters for electricity for years now. Except for doing laundry on weekends or after 7:00 pm, I’ve found there are few options for saving electricity costs. Right now, it gets dark around 4:30 pm, so lights come on in occupied rooms, and I’d rather cook supper before 7:00 pm. Electric heating in an occupied half-basement basically doubles my electricity usage. One year, I experimented with using one or two portable 1500 watt electric heaters in occupied upper storey rooms to supplement my much cheaper natural gas furnace heating, and my electricity costs skyrocketed another factor of 2 or 3. I don’t use air conditioners in the summer, so sweat out the 2-4 weeks of muggy 30+ Celsius (86+ Fahrenheit) weather. Basically, the smart meters provide more detailed measurements, but IMO don’t justify the costs, and don’t alter my behaviour and electricity usage much.

December 6, 2018 11:07 pm

Green initiatives = feelings and virtue signalling. Reality has no role to play, except when the mess needs to be cleaned up.

Steve Reddish
December 6, 2018 11:14 pm

Agreed. I participated in a pilot program involving internet accessible thermostats that allowed the electric utility to reduce the thermostat setting slightly during peak demand periods. My electric co-op gave a discount for allowing installation of the thermostats.
The reduction in my utility costs were exactly equivalent to the amount of the discount for participating. The “savings” due to lowered electricity consumption was imperceptible.
The program was effectively .discontinued after the test period.


Joel O’Bryan
December 7, 2018 12:26 am

I live in Tucson AZ. My electric company (TEP) had a big push for 2 different offpeak/peak plans from the straight metering I have.
I have a 240V pool pump which uses 2Kw when running which is 6 hours winter and 10 hours summer.. Plus 6 months of A/C are my 2 big appliances.
I put all 3 in spread sheet assuming I would shift my pool timer to off peak and preprogram the AC to higher settings during peak.

My savings were less than $10/month in most cases because. the peak/offpeak plans have standard fees to use them. Not worth the hassle or the constant worry about when I run things.
The electric companies are in the businees to sell electricity. They don’t want to lose anymore money than they have to on these plans.
And I don’t need the virtue… I am a Deplorable after all.

Scouser in AZ
Reply to  Joel O’Bryan
December 7, 2018 10:33 am

“…the peak/offpeak plans have standard fees to use them. …”

If they gave a reduced base fee to go off-peak they might get a better sign-up.

My very rough TEP calculations followed yours and may be more exaggerated due to my roof-top solar panels.

Peta of Newark
December 7, 2018 1:26 am

Its called Magical Thinking – what chronically depressed people do.
(Chemically depressed, NOT to be confused with the sad, heartbroken or morose)

Strangely coincidentally, Magical Thinking is how the GHGE works.

funny old world innit

Tim Beatty
December 7, 2018 1:29 am

Sounds like Salt River Project, an electric utility in Phoenix. Their TOU plans are one of the bright spots. They have awful bureaucratic overhead but their meters break down usage per hour. I can see how much energy I use each hour so I can see how much was shifted to off-peak. Also I can see how much things like “pre-cooling” helps and verifies that the pool is off-peak. This past summer, the condenser fan on the A/C failed and the TOU graph showed me the hour that it failed (energy use spikes because the compressor stays on). The energy use is updated daily. It even helps the utility find failing meters. It didn’t update over one weekend so I called and they had detected the same problem and proactively dispatched a tech to replace it. The Time-of-use plans are great. They do save money but it’s only 10-20% mostly in the summer. It has an indirect effect on the utility infrastructure as they target building the grid to be 20% overdesigned for the worst demand day of the year. Keeping that peak down affects their infrastructure.

Ben of Houston
Reply to  Tim Beatty
December 7, 2018 4:14 am

I’m glad it’s worked for you. My breakdown has been useless. It has both too much data to easily process and not enough to actually be useful in doing a breakdown. I refused a time-of-use plan, so I’ve never taken the time to do the experiments necessary to make it useful.

Reply to  Tim Beatty
December 7, 2018 5:59 am

TB: Yes, these programs are for the utility to meet demand better.

They “inspire” us to help them with their problem by making an appeal to as noted above, our desire to be virtuous; to not be wasteful or gluttonous, to not be one of the “bad guys” or one of the ignorant people.

I have a couple bills where they keep asking me to opt into “electronic billing,” and saving a tree, rather than getting a paper bill mailed to me. They pester me like this month after month.

Their goal is to save money by not sending out a paper bill. But the appeal is for me to be virtuous.

I will change when they offer to share some of the money they would save.

Political discussions do break out here on WUWT, so I will add: political parties do the same. Vote for us to be virtuous, and don’t be one of the bad guys or ignorant guys. But when it comes down to results, the gruel is pretty thin.

Lee L
December 7, 2018 4:26 am

Re..This post from Roger Taguchi
“Basically, the smart meters provide more detailed measurements, but IMO don’t justify the costs, and don’t alter my behaviour and electricity usage much.”

and others in this thread are mistaken about the actual purpose of smart meters. The ‘programs’ are intended to engage you only, kind of like smoke and mirrors. The smart meters, if you have a look at them closely, note the manufacturer and model number, then look those up on the manufacturers’ website, you can find all the functions that the meter is capable of.
The key item is that the meter usually is able to participate as a node in a home network of appliances on a network like Zigbee. This gives the utility operator a network node in your home and ‘smart appliances’ are also nodes on, say, the Zigbee network. So yes, in the beginning, you are able to voluntarily change your habits if you choose and do clothes drying at night. That doesn’t mean that the utility couldnt actually enforce such a regimen on everyone on an appliance by appliance basis via the capability of Zigbee. This is completely possible with ‘smart’ appliances on a home network and in my opinion, enforced rationing is the ultimate goal of smart metering.

Brooks H Hurd
Reply to  Lee L
December 7, 2018 7:56 am

Are you certain that these systems are Zigbee? They are more likely Z-wave since it opearates at a lower frequency and thus does a better job penetrating walls.

Reply to  Lee L
December 7, 2018 9:29 am

I would accuse you of being paranoid, except if everyone really is out to get you…?

As much as 40 years ago some utilities offered incentives to allow them to install a device on your air conditioning condensing unit that they could shut it off remotely, for a short period of time like 10 to 15 minutes, to execute a rolling demand reduction during times of high demand. I never signed up for one, because I was disinclined then just as I am now to give anyone else control over my comfort. Has anyone heard lately of such a program?

Neil Jordan
Reply to  Red94ViperRT10
December 7, 2018 10:03 am

Yes. With a large southwest utility. I participate not because of virtue (I have none to signal), but because of an explanation by an industrial electrician who worked on a laboratory power supply for me. During brownout periods, I couldn’t keep my electronic devices in calibration. The electrician checked and noted that the utility had dropped voltage to something like 90 to 100 volts, outside the lower voltage design limits of the electronic devices voltage stabilization. The electrician said that operating in this low voltage environment is death on electric motors as they draw more current and run
hotter. I took that to heart at home with the utility offer. A few days of moderate discomfort in exchange for an air conditioner compressor motor that does not die prematurely. I guess you could call this a variant of Pascal’s Wager, and we get about $100 rebate each summer. The WUWT world will quickly inform us if I had been led astray all these years.

P.S. The solution to the laboratory voltage was a large voltage stabilizer transformer. It drew about 30 amps all the time and gave me 5 or so amps of stable electricity when I needed it. I guess you could call this a reverse Pascal’s Wager for virtue signaling.

Tom in Florida
December 7, 2018 5:32 am

I suspect that many people, myself included, are at the point in our lives where we really don’t care if we save a few dollars per month on utility bills. We have a life style we want and don’t want to change it over a few pennies a day. After all, don’t we use electric appliances to make our lives easier? They are our slaves, we should not be slaves to them. If I needed to cut costs to save money there are other things I can do that are more effective, such as reducing the number of Tampa Bay Lightning games I attend, limiting the number of times my wife and I eat out at restaurants or stop going to Las Vegas.

Walter Sobchak
December 7, 2018 5:48 am

3335.01 The Ohio State University.

The educational institution originally designated as the Ohio agricultural and mechanical college shall be known as “The Ohio State University.”

December 7, 2018 7:30 am

Here is a renewed attempt to get the US back into the program of AGW. …https://dailycaller.com/2018/12/07/chuck-schumer-climate-infrastructure-spending/

It is evident that this is of importance to the Dems for them to use it as a key bargaining chip. Would Trump agree to fund AGW projects, if the Dems offered to give him the funds for his wall? The Dems need to try and restart money flows into renewable/AGW related projects and studies. Their top donors must be pushing very hard for them to get legislation passed which would open up the money streams.

Lennard Plantz
December 7, 2018 8:01 am

There is a lot more required to actually make a difference in energy costs, including control of A/C, heating, water heaters, etc, etc.

One site on the web that does a good job of explaining this is http://www.desert-home.com. It is a gentleman from Arizona who felt his energy costs were getting out of line, and what he did about it. It is a very interesting site.

Johann Wundersamer
December 15, 2018 9:19 am
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