Effects of Time-of-Use Pricing on Peak and Off-Peak Electricity Use: An Empirical Study Based on Microlevel Data

To address the rising electricity demand and seasonal supply variations, many countries have implemented seasonal time-of-use (TOU) pricing to regulate electricity usage during peak and off-peak periods across different seasons. However, the effectiveness of TOU pricing remains debated. This study analyzes hourly data from 478 firms in Jinan, the Capital of Shandong province of China, using a regression discontinuity design to examine whether seasonal TOU pricing changes effectively impact firm electricity usage during peak and off-peak hours. Specifically, we investigate whether the effects of TOU pricing increases and decreases are equally evident. Focusing on the summer and autumn TOU pricing, we find an asymmetrical impact: while increased summer TOU prices do not significantly lower electricity consumption, decreases in autumn TOU prices cause a noticeable increase in both peak (12.30%) and off-peak (13.66%) usage. Unconditional quantile regression indicates that firms with lower electricity consumption are more sensitive to price increases. The study evidences the difficulty firms face in reducing electricity usage, suggesting that mere price increases may not always achieve demand reduction, thus highlighting the need for further refining TOU pricing.