In 2016, California’s three largest investor-owned utilities (IOUs) conducted residential opt-in time-of-use (TOU) pilots, with each IOU recruiting over 10,000 households into the pilot. As part of this effort, IOUs were required to ensure that any TOU rate schedule would not cause unreasonable hardship for economically vulnerable households. Bill impact analyses alone, however, would not reveal whether TOU bills made a meaningful impact on the economic wellbeing of low-income households.

To better understand if TOU rates exacerbate existing economic hardship of low-income customers, we developed an experimental design to test this hypothesis, which included an economic hardship metric using validated survey items. Through rigorous survey design and analysis techniques, this study identified several key lessons for California’s future TOU roll-out efforts.

Integrating impact analysis with customer research revealed nuances to lived hardship. Although billing analysis demonstrated that households on a TOU rate paid an average of $5 to $40 more a month during the summer than what they would have paid on a standard rate, analysis of summer-period survey data revealed that the vast majority of those on a TOU rate did not tend to experience increased economic hardship compared to control groups on a standard rate.

We did find, however, that TOU rates can cause economic hardship under a limited set of specific conditions. The limited evidence of increased economic hardship revealed a key interaction between income, rate complexity, climate, and season: measurable increases in economic hardship were limited to low-income customers on more complicated TOU rate structures in California’s hottest climate zones in summer months only. Opinion Dynamics’ study results armed the California IOUs with the insights needed to successfully default their residential customer base to TOU rates without causing undue economic harm to their most vulnerable customers. The IOUs are currently rolling out their default enrollments, using more simplified TOU peak pricing schedules and exempting low-income discount program customers living in hot climate zones from the automatic transition. These exempted customers are not excluded from the program entirely; however, as they are able to opt-in to the program.