By Kevin Stark

If utilities want to lower peak electricity loads, they might want to consider rate structures similar to the surge pricing used by ride-hailing services such as Uber and Lyft.

A new study from the University of Chicago concluded that “dynamic” pricing is more effective than moral persuasion on its own for changing customer behaviors in the long run.

The research team, led by Koichiro Ito, a professor at the Harris School of Public Policy at the University of Chicago, compared the effectiveness of dynamic pricing against other behavior change strategies, such as sending text messages asking customers to turn off lights and appliances during peak hours.

Managing peak loads can be a costly challenge for utilities and ratepayers. Meeting electricity demand on hot summer afternoons or winter evenings can strain the grid’s resources and require buying power from more expensive and less efficient peaking power plants.

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