How Hourly Pricing Can Help Lower Electricity Costs

In Illinois, attempts are being made to modernize the state’s electric grid and provide its residents with convenient ways to conserve and save money on their electric bills. Strides are done in ComEd, Illinois’ largest electric utility company, and their endeavors to provide people and businesses with access to energy data.

Research Performed

In an attempt to see how ComEd customers would fare under a “real time pricing” program, actions taken included the Illinois Commerce Commission approving the release of anonymous, aggregate energy-use data on a large scale. These were broken down into half hour increments over a 24 hour day where prices change hourly. The most important finding was that 97% of customers would have saved money even if they made no changes in how they use electricity.

Findings of the Research

The reason customers were able to save money using the real time electricity pricing was because they were rewarded while using electricity during times when rates are lower. This leaves us to ponder how much customers would save if they actually did change their behaviors in an effort to deliberately take advantage of lower prices.

Here are some other findings based on the study:

  •         97% of households could save money on the Hourly Pricing program for a total savings of $29.8 million annually
  •         The average customer could save $86.63 on their annual electric bill
  •         Top savers could save as much as $104 a year on their annual bill
  •         Customers who stand to lose money under Hourly Pricing would see an increase that would average $6.23 on their annual bill
  •         There are no significant differences between the effects of real time pricing for low income customers

Other Benefits of Hourly Pricing

Hourly pricing can also help utility companies avoid high costs that result from running expensive and dirty power plants which becomes a necessity when energy demand is high. This is due to the fact that customers will be aware of higher pricing during this time and choose to hold off on running appliances until electricity is cheaper. This will result in more efficient use of power plant resources and energy.

Real time pricing can also lower pollution. For instance, in Texas, wind blows strongly at night and as a result, some Texas utilities offer free power from 9PM to 6AM to encourage customers to take advantage of a low-carbon power source and use energy when it’s cleanest.

Before we can determine the full benefits of Hourly Pricing, more research must be done. There is some evidence that the lingering effects of a ‘polar vortex’ may have influenced the level of savings so testing must be conducted under different conditions. That being said, this data analysis is an important step in determining how people can save money while taking advantage of cleaner, more efficient energy. It will be interesting to see how this affects the people of Illinois and how it serves to benefit the rest of the country and even the world.