On first glance, dynamic pricing (any electricity price that varies by time of day) may sound more complex than standard flat electricity rates. But in fact, this strategy can help consumers save significant amounts of energy and money. Also, pilot projects and large-scale programs have proven that consumers at all income levels can — and will — take advantage of these opportunities.

Dynamic pricing can include time-of-use rates, critical peak prices, peak time rebates, and hourly prices.

Last week I was part of a team of presenters in a webinar on the consumer benefits of dynamic pricing. Here are some highlights…

My fellow presenters were:

• Rick Morgan, Commissioner, District of Columbia Public Service Commission
• Ahmad Faruqui, economist, the Brattle Group

Morgan offered a regulator’s perspective, emphasizing that “dynamic pricing empowers customers to manage their energy bills.” He also noted the results of the highly successful PowerCentsDC program — where 89% of participants would recommend it to their friends and neighbors, and 93% preferred dynamic prices to flat rates.

Dr. Faruqui shattered several myths about dynamic pricing. For example, he offered evidence showing that:

• Customer response to dynamic electricity prices persists over time.
• Low-income customers benefit from dynamic pricing.
• Consumers are familiar and comfortable with dynamic pricing in aspects of their lives beyond electricity use.

I contributed two main points. First, dynamic pricing has the potential to offer tremendous benefits for everyone — through less need for fossil fuel-fired power plants; a more reliable power grid; and cleaner, more cost-effective wind and solar resources. In the U.S., these benefits could be worth tens of billions of dollars per year.

Second, barriers to delivering dynamic pricing options to energy consumers are surmountable. In fact, the utility industry owes it to consumers to make these benefits possible. Regulators and utilities can do this by:

• Empowering consumers with information and pricing choices.
• Implementing standards that enable automated “set and forget” responses to price signals for devices such as smart thermostats, appliances, equipment, and lighting systems.

As long as dynamic pricing options are voluntary, what’s not to love about dynamic power prices?