Consumers’ Attitudes towards Surcharges on Distributed Renewable Energy Generation and Energy Efficiency Programs

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Increasing penetration of energy efficiency programs and distributed renewable energy generation has imposed significant challenges for utilities to recoup their large upfront costs. There is a heated debate on what

Increasing penetration of energy efficiency programs and distributed renewable energy generation has imposed significant challenges for utilities to recoup their large upfront costs. There is a heated debate on what surcharges should be implemented to help the utilities recover their fixed costs; however, very few studies focus on consumers’ attitudes regarding this topic. This study surveys about 190 residential consumers throughout the United States in November 2015, investigating their preferences and attitudes towards extra demand charges and volumetric energy price increases. We apply probit models and regress consumers’ attitudes on selected socio-demographic and behavioral variables. The results indicate the homeowners are more likely to prefer demand charges when compared to renters. The demographic and behavioral factors impact consumers’ perception of bill savings from energy efficiency programs or solar panel installation and also influence how consumers perceive the fairness of utilities recovering revenue losses by increasing volumetric energy price. In this paper, we demonstrate there is preference heterogeneity among consumers and that policy makers should be aware of such preference heterogeneity and apply policy targeting based on the identified demographics and behavioral factors impacting consumer preferences.