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Current consensus holds that 1) passing through wholesale electricity clearing prices to end-use consumers will produce maximal efficiency gains and 2) simpler forms of time-varying retail rates will capture only a small portion of potential benefits. We show that neither holds in the presence of capacity costs typical in U.S. wholesale markets. Using an optimization model describing the short-term problem faced by an electricity retailer, we find hourly prices that optimally pass through capacity costs. We estimate benefits for a retailer using these prices as well as optimal configurations of a number of time-varying rate structures. Testing a range of realistic assumptions, we find that in the absence of a well-designed demand charge, passing through clearing prices may miss up to three quarters of the benefits possible from optimal hourly prices. By contrast, a simpler critical peak pricing structure enables retailers to achieve approximately two-thirds of the total possible benefits.

This paper estimates the daily kWh responses on a working weekday of 1326 single-family-home residents who voluntarily participated in a residential optional dynamic pricing (RODP) pilot in the winter-peaking coastal province of British Columbia (BC) in western Canada. Based on the pilot's operation in November 2007-February 2008, we estimate that the kWh reduction in the peak period of 4-9 pm on a working weekday sans an in-home display (IHD) is: (a) 2.2% to 4.4% at time-of-use tariffs with peak-to-off-peak price ratios of 2.0 to 6.0; and (b) 4.8 to 5.3% at critical peak pricing tariffs with peak-to-off-peak price ratios of 8.0 to 12.0. The IHD approximately doubles these estimated peak kWh reductions. As BC residents already have smart meters with an IHD function, these findings recommend exploring the use of a system-wide RODP program to improve the BC grid's system efficiency.

In this paper, we provide demand impact estimates of a critical peak pricing (CPP) program tested in the summer of 2011. We develop econometric models that examine demand responses of participants in "opt-in," "opt-out," and "tech only" CPP programs. Opt-out customers received bill protection while tech only cus­ tomers received in-home displays alerting them of critical peak times, but they were not placed on the CPP rate. Our results indicate that opt-in customers re­ duced critical peak period demand the most while opt-out customers' appear to attenuate their reduction because of bill protection. Additionally, we refine our findings using participant survey responses. In general, we find participants in test groups whose environmental or "green" attitude is high bad the strongest demand response.