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Article RSE 14008945

Italy - Impact of the enforcement of a time-of-use tariff to residential customers in Italy

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ISGAN Annex 6 T&D Case Book Version 1.0 Spotlight on Smart and Strong Power T&D Infrastructure, pp. 94-104, Aprile-2015.

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W. Grattieri (RSE SpA) , S. Maggiore (RSE SpA), M. Benini (RSE SpA) , M. Gallanti (RSE SpA)

GESTDOMANDA 2015 - Demand side management

This article shows the results obtained from the monitoring of a group of domestic end users after the entryinto force of the mandatory Time-of_Use tariff in Italy, with the aim of assessing their response and theinfluence of the new tariff on their consumption habits.

Flat rate is the most common method to bill electricity consumption because it minimizes the costs of metering and billing. However, it does not induce customers to adjust their consumption according to the abundance or scarcity of electricity: in particular, it does not encourage them to lower it during high demand hours. Real time rate can be found, instead, on the opposite side because it links the price paid by the customers to the real costs of electricity; this requires a more complex metering infrastructure because consumptions need to be recorded in each time interval with their specific prices but it allows price signals to reach the customers in the proper way.

The drawback is the fact that customers who are not able to move their consumptions will face higher costs. Time-of-Use (ToU) tariffs stand in between: there are a certain number of time slots during the day, in which the price paid by the customers is established in advance, based on mid-term (e.g. quarterly) predictions; this allows for a reduced complexity of the metering infrastructure and the longer the time slots, the more averaged/smoothed are the price signals. Such a mechanism relates in some degree the price variability of electricity with the costs of its supply, allowing a collaborative response to the demand among customers (the so called “demand-response”) but, at the same time, it relatively protects (w.r.t. real time rates) those who are not able to modulate their demand according to the price.

The introduction of the Time-of-Use tariff for residential customers in Italy is a significant event: in fact, 20 millions of families are currently paying their electricity consumptions with a variable price during the day and this represents an un precedented occasion to analyze the changes of customers’ behaviour in response to time variable electricity prices. In order to assess the impact of the tariff in the short and medium term on the Italian consumers, RSE started a research project in collaboration and under the patronage of AEEG.

To this aim, a group composed of about 28,000 household users (the so-called “customer panel”), statistically representative of the whole Italian population, was selected; their monthly electricity consumption data measured by smart meters were collected, starting from July 2009 (i.e. one year before the introduction of the mandatory ToU tariff); this allowed for an analysis of the change of consumption behaviour after the introduction of the transitional ToU tariff.

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