While tariffs are higher to cover the supply costs during peak times, the tariff is lower during off-peak times than the conventional flat rate. Conversely, in contract incentive-based DR programs, the C Level Executive List consumer signs an agreement that gives the distributor the right to impose consumption limits a few hours a day in exchange for a discount on the electricity tariff or total bill. If the consumer achieves a pre-defined consumption reduction target, contract incentive-based DR programs can provide discounts on the electricity tariff or bill. DR is not a new idea. Across Latin America and the Caribbean (LAC), DR programs for industrial and commercial sectors have been implemented.
Household consumers have been historically considered price takers, especially in the short term. Nonetheless, digitalization’s radical transformations to the electricity sector create new opportunities to better include citizens in decision-making. DR programs can be replicated in the residential sector, especially with developments in advanced metering infrastructure (AMI), appliances and heating digitalization. Brazil, Costa Rica, and Uruguay have already implemented household DR programs. Most are based on ToU tariffs and voluntary adoption, so the consumer can elect to move from a flat to a ToU tariff program. Nevertheless, residential DR is still very new for consumers.
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C Level Executive List
