How much do households respond to electricity prices?

Evidence from Australia and abroad

In this report, we look at how pricing changes might impact the amount of electricity Victorian households use. 

We examine how pricing changes affect electricity demand over time and potential barriers to demand-based pricing. 

We also consider the limitations of flat-rate pricing as electric vehicles become more popular and renewable and distributed energy becomes more affordable. 

Key findings 

• There is strong evidence that households are likely to respond to price changes.  
• Generally, price changes affect electricity demand more than demand for other necessities, like fuel and water. 
• Evidence shows that households will change their electricity use within a day in response to incentives.  
• Technology makes it easier for households to find out about price differences and respond. 
• We need more evidence to understand how low income and vulnerable households respond to price changes. We also need to know if different policies can help reduce any risks.