Small nudges add up to big electric savings

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Not all electricity is created equal. Utilities prioritize getting power from the cheapest sources available. That means that, as use rises to what's typically a mid-afternoon peak, utilities end up sourcing ever more expensive supplies of electricity. By the time we reach the use typical of a late afternoon during a heat wave, the utilities have to call in the most expensive forms of power around-typically, the oldest, least-efficient, and most-polluting plants.

So cutting down on energy use during these peak demand events is in a utility's interests. And, since it's an economic problem, a lot of the solutions have also been economic, like setting higher electricity rates during these times to encourage customers to cut back on use. But a new study suggests that something as simple as a gentle reminder to customers can have a noticeable effect, and stacking reminders can have as much of an impact as raising power prices by 70 percent.

A gentle nudge

We've done studies of how people change their energy use in response to economic incentives before, but the effects have generally been pretty small. If you've ever been confronted by a confusion of possible calling/data plans and can't be bothered to figure out which one is the best deal, you probably understand why-the economic incentives often aren't large enough to drive much interest. That's especially true of things like heat-wave-driven electricity peaks, when any altered pricing is likely to last just a few days.

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