Energy: Health and financial impacts of time-of-use energy rates raise equity concerns

Products that aim to change energy usage patterns, like time-of-use tariffs, can lead to disproportionately negative financial and health impacts for some vulnerable groups, suggests a paper published this week in Nature Energy. Such demand-side response measures are gaining prominence, but can be detrimental for the many households already struggling to balance energy costs with other necessities, such as food and medicine.

Lee White and Nicole Sintov analysed data from a subset of 7,500 households that opted to participate in a pilot program conducted by a utility company in the southwestern United States. Households were assigned to one of two time-of-use rates, where they were charged more for energy use during peak evening hours, or a control group. The authors found that all households assigned to a time-of-use rate experienced bill increases. However, elderly people and those with disabilities experienced greater bill increases on time-of-use rates compared to non-vulnerable households. Those with disabilities were also more likely to seek medical attention for heat-related reasons when assigned to a time-of-use rate. Although Hispanic and low-income households saw lower bill increases on time-of-use rates, Hispanic households experienced more negative health outcomes.

This study shows that effects of demand-side response can vary across sociodemographic groups, suggesting that such measures must be tested before widespread implementation to ensure that impacts do not exacerbate existing inequalities. This research was carried out during the summer in a hot climate, and so results may not generalize to different rate designs or climate conditions.