Cost-effectiveness of price response in the residential sector: Preliminary findings from the California experience

Like many states and countries with restructured electricity industries, California is considering the use of price response to stabilize markets, improve reliability and reduce rates. An official investigation into the cost-effectiveness of advanced metering, demand response and dynamic pricing in the commercial, industrial and residential sectors is currently underway in California. Preliminary results show that some price response options are likely to be cost-effective for the residential sector. Ongoing research in California includes a statewide experiment to determine price elasticities in the residential sector, with results expected at the end of 2003. Future work will use these results in a detailed analysis of the cost-effectiveness of advanced metering and dynamic pricing in California.