Customers Overestimate Savings with Energy-Conservation Plans

COLUMBUS, Ohio — A study from The Ohio State University finds that most utilities customers base their decision to stay in energy-conservation programs on perception, not reality.

Consumers seem to rely more on their intuition about how much money they are saving rather than proof that their bills are smaller, the study finds. Cost savings were found to be minimal when participating in programs that encourage thoughtful energy usage, such as running loads of laundry during nonpeak times and turning off air-conditioning during peak evening hours.

“What really prompted customers to decide whether they wanted to stay in the program was their perception of how much money they were saving – not so much actual savings,” said study author Nicole Sintov, assistant professor of behavior, decision making and sustainability at Ohio State. “People thought they were saving more than they were, and they were making decisions to renew the program based on these ideas, not on real savings. These are surprising results, and could suggest that there’s a disconnect that could undermine the goals of these programs.”

Results of the study were published Dec. 3 in the scientific journal Nature Energy. Sintov worked on the research with Lee White, a postdoctoral researcher at Ohio State. The study included 8,702 customers of a large power utility in the southwestern United States.

Households were randomly assigned to one of three time-of-use rate programs, or to a control group that remained on a normal rate during a 12-month pilot of the program. After several months in the pilot, participants filled out surveys that asked about their willingness to stay with the plan. Other questions were about perceived savings, perceived ability to reduce on-peak use, perceived understanding of rates and actual understanding of rates.

The study finds that energy-conservation, or time-of-use rate programs are effective, but “many consumers have a faulty impression about their savings,” which prompts them to stick with a program, Sintov said.

“They may be thinking, ‘I made all these efforts, things like turning off my lights, so I must be saving money,’ when in reality what they’re doing is barely moving the needle on their usage or bills,” she said.

While factors like environmental stewardship motivated consumers, it was the perception that the programs have a significant impact on their budgets that kept them in the program. However, the more informed consumers were in terms of the actual rate structure, the less likely they were to want to stay in the program.

“It’s a good idea to actually look at your bills and your usage patterns to see what’s happening in your household,” Sintov said.

Copyright 2022 The Business Journal, Youngstown, Ohio.