Heliyon (Jun 2024)
Customer's response to dynamic pricing in utility energy Tariff quality and reliability with the time of use: An Empirical case study of household electricity customers in Indonesia
Abstract
Time of Use (ToU) is one of the types of dynamic pricing strategies at which a pricing scheme employs a variable rate rather than a fixed one causing electricity tariffs over a particular consumption period to rise once in high consumer demand at peak times and to fall once the demand is low at off-peak times. Owing to the important factor of perceiving customers' response to the successful implementation of the ToU tariff scheme, this study examines the household electricity customers' response in Indonesia - especially residents of Java Island and Bali Island - to future implementation of this dynamic pricing strategy in utility energy tariff quality and reliability. Data on the behavior of the PLN customers need to be thoroughly gathered and then analyzed quantitatively for well-informed decisions on a set of variable rates based on peak/off-peak times of the day and the season to establish in a board of directors' room. Hence, survey work is conducted, and a questionnaire is carefully designed and developed in this study to help collect and analyze the data on consumer behavior. The results show that customers’ response exhibits a promising outcome. At the total number of 451 respondents, 63 % of the survey participants expect to opt into the ToU scheme and the reason for this is their sensitivity to a bargain price of the electricity rate. However, 37 % of the respondents find ToU burdensome to implement and very demanding, as a result they opt out of the ToU scheme. From the results of the survey, it can also be inferred household energy-related activities that customers are quite willing to shift are washing and ironing clothes where a shift in these activities would lead to potential savings in the electricity bills of 26 % off the regular price. From the use of the quantitative method in this study, the total potential daily load reduction of energy consumption with the ToU tariff scheme could reach 3,23 kW for each customer. The findings conclude that customers have presented an encouraging response to future implementation of ToU and express their thoughts ToU seems to bring potential benefits of saving electricity bills and looks as if it is fairly easy for customers to adapt to shifting their energy usage from peak times to off-peak times.
