Emergency pleas for energy conservation may have unintended consequences

Emergency pleas for energy conservation may have unintended consequences

When the demand for electricity threatens to exceed supply, electric utilities often issue public requests for households to dial down their energy usage during peak hours. A recent study suggests that those appeals may inadvertently have the opposite effect.

Original Paper:
Holladay, J. Scott, Michael K. Price, and Marianne Wanamaker. "The Perverse Impact of Calling for Energy Conservation." Journal of Economic Behavior & Organization 110 (February 2015): 1–18. DOI: http://dx.doi.org/10.1016/j.jebo.2014.11.008

Household electricity consumption in the U.S. reaches its highest levels during the hot summer months, when people rely on air conditioning for relief from the heat. Since this increased demand can strain the finite capacity of local power plants, electric utilities commonly issue press releases urging customers to lower their energy usage during peak hours. The reasonable assumption is that enough customers will follow instructions to reduce overall electricity demand. Upon closer inspection, however, utility companies may well be getting the opposite of what they ask for.
 
In a study published by the Journal of Economic Behavior and Organization, a team of three economists analyzes almost 10 years' worth of data from the Washington, D.C. metro area in order to test the relationship between energy-conservation pleas and hour-by-hour electricity generation. The authors find that, contrary to expectation, a publicly broadcasted call for short-term conservation results in a significant increase in that day's total energy demand.
 
A key point in the research is that utility companies' press releases are not always covered by the media — perhaps because they don't make the most exciting news. This creates a convenient control group: days when the utilities predicted high energy demand, but their calls for conservation did not reach the public. The researchers compare data from those days with the days when there was media coverage. They also examine and rule out other explanations in order to isolate media coverage as the cause of systematic changes in energy use.
 
A pattern emerges on days when the media relays a utility company's conservation request: energy demand rises substantially during the earlier, non-peak hours of the day, without a corresponding reduction in use during the later, peak hours. The researchers suggest that this may be the result of people trying to "pre-cool" their homes or otherwise front-load their electricity consumption for the day. The data show, however, that such front-loading doesn't significantly decrease the amount of energy used later in the day. The consequence is that overall electricity use actually goes up in response to a public appeal for energy conservation.
 
The study also estimates the amount of carbon emissions resulting from increased electricity generation. Suppliers have to fire up lower-efficiency power plants to meet higher energy demands, and the carbon impact of this additional generation differs from region to region based on the types of fuel used. In the D.C. metro area, utility companies end up emitting about 35 extra tons of carbon on days when the media broadcasts their energy conservation requests. This is the equivalent of putting an extra 164,200 passenger cars on the road for a day.
 
Other research has addressed the effects of broad appeals for resource conservation, but this is the first study to assess the outcome of short-term, "emergency" pleas for energy conservation. It's a cautionary tale for policymakers, utility companies, and indeed anyone who might rely on public appeals in attempting to change consumer behavior. The effectiveness of this tactic may be worth re-examination in light of the findings discussed above. More generally, the counter-intuitive conclusions of this study demonstrate the importance of measuring actual outcomes rather than relying on assumptions.

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