1. USE OF PEAK PRICING MARKETS Paige Kirstein

2. THE MARKET Market production must continue at max output all the time. Market demand fluctuates intensely in a predictable pattern.

3. GOAL Limit Peak Usage Environmental Benefits Economic/Efficiency Benefits Avoid Outages

4. METHOD Price Fluctuations based on peak times of usage Fluctuations must be… Expensive enough to change behavior Cheap enough to not debilitate those without the option of changing when they utilize. ‘ Understandable Relevance of the destination of the money

5. PRECEDENTS NYC Train System Peak and not peak fares. Cell Phone Minutes Peak minutes and not peak minutes. Movie Theatre Tickets Matinee, super matinee, and evening tickets

6. EMERGING NEW MARKETS

7. INTERNET Constrained Bandwidth Current: Flat Rate Punishes light users Proposed: Fluctuating per usage rate Limit excessive usage Encourage off peak usage (night time) Cisco charging plan

8. TRAFFIC Constrained Road Size Current No tolls on most roads Same tolls at all times of day Proposed: Varying Fees Higher travel costs Changed travel behaviour Shorter travel times Revenue generation

9. STOCKHOLM TRAFFIC CASE STUDY Prices $6.50 to go by car through city centre peak, $4.30 non peak $4.30 via Essingleden during peak hours, and $0 non peak Progressive Tax Employed affected more than unemployed Rich affected more than Poor Overall effects on traffic reduce the number of car journeys by almost 5% for the county number of journeys made by public transport is estimated to increase by 3% walking and cycling increase by slightly more than 1%. Number of car trips during peak hours reduced by 20% in the inner city.

10. ELECTRICITY Constrained electricity output Current: slight variation between peak (day) and off peak (night) Pre-contract pricing and “spot” pricing Creation of over 15% demand in order to prevent black outs. Proposed Comprehensive, fluid method of charging. Distributed usage will require less electricity. Average prices cheaper if excess isn’t created.

11. ELECTRICITY PILOT RESULTS Price Incentives B = - 0.15, p < 0.01 Presence of price incentives decreases peak usage Magnitude has minimal effect Behavioral Incentives B = 0.33, p < 0.001 Behavioral commitments More knowledge of system = Stronger commitments Three times larger effect than price

12. LESSONS FROM OTHER MARKETS Traffic Clear Alternatives Individuals know to take different routes ---> Easy peak energy tips Internet Cisco’s system pricing is “tiered, detailed, and itemized billing to subscribers” ---> detailed, frequent billing

13. ADDITIONAL NON-MONETARY INCENTIVES -Educate about the rate structure - an understandable auction - Switch non-cooperative game theory to cooperative - Devices -Subsidies on timers -Requirements for Smart Meters -Indoor meters

14. EXTRANEOUS Most effects individuals that live inside city center Create exclusively rich centers Exemptions/discounts for area residents?