Most US consumers are charged a near-constant retail price for
electricity, despite substantial hourly variation in the wholesale
market price. This paper evaluates the first program to expose
residential consumers to hourly real-time pricing (RTP). I find that
enrolled households are statistically significantly price elastic and
that consumers responded by conserving energy during peak hours,
but remarkably did not increase average consumption during offpeak
times. The program increased consumer surplus by $10 per
household per year. While this is only one to two percent of
electricity costs, it illustrates a potential additional benefit from
investment in retail Smart Grid applications, including the
advanced electricity meters required to observe a household’s
hourly consumption.