The user pays – so know what you’re using
Economics theories suggest that knowing the price of a good or service influences consumption. At a very basic level, it is seen at the supermarket, when a shopper switches from their regular brand product to one that is on sale.
For electricity and some other utilities, pricing has often been complicated. With bills arriving monthly or quarterly, it can be difficult to work out the financial cost of choices (such as using the clothes dryer). Like the grocery store example, more information about the price may influence consumption.
Knowledge is (electric) power
The introduction of smart electricity meters in some countries is allowing consumers to more closely monitor electricity use and cost. While the emerging technology is not controversy-free (reported concerns include the security implications of sending real-time information), behavioural economics blog Nudges cites evidence that the smart meters can change behaviour. It says a year-long United States Department of Energy study found consumers on a grid using smart meters “reduced peak consumption by up to 15 percent, and overall consumption by up to 10 percent”.
Super charged budgeting ideas
The smart meter experience suggests that keeping an eye on costs and consumption is a good idea. Those not using smart meters may still be able to keep a closer watch using their traditional meter.
An analysis of bills may also help.
Consumers can shop around annually (or more often, if desired) to see if changing suppliers can result in savings. Also, consider asking for more regular, actual-reading electricity bills to increase the information to hand on cost and consumption.