Academic journal article Australasian Journal of Regional Studies

Improving Consumers' Responsiveness to Electricity Demand Management Initiatives in Regional New South Wales: The Potential Use of Behavioural Based Constructs for Identifying Market Segments

Academic journal article Australasian Journal of Regional Studies

Improving Consumers' Responsiveness to Electricity Demand Management Initiatives in Regional New South Wales: The Potential Use of Behavioural Based Constructs for Identifying Market Segments

Article excerpt

1. INTRODUCTION

There is substantial documented evidence that households are wasteful of energy (Thogersen and Grenhoj, 2010). Calls to moderate energy demand because of climate change concerns have increased interest in household demand management programs. However, the effectiveness of demand management programs has been variable and not all programs have motivated sufficient consumers to respond, or respond in the desired way (Walsh, 1989; Joskow and Marron, 1992; Stern, 1999). One reason for the lack of success of some programs appears to be a lack of market orientation resulting from insufficient understanding of the different segments within the household consumer market (Walsh, 1989; Ferguson, 1993; Long, 1993; Encinas et al., 2007; Pedersen, 2008). These studies have demonstrated that participation in demand management programs differs according to demographic, situational and, of particular importance to the current paper, geographic variables and that communication with relevant segments has at times been poorly targeted (Ferguson, 1993; Pedersen, 2008). Yet few studies have been undertaken to identify the household segments most interested in alternative demand management programs, including their characteristics, their program preferences, how they might most effectively be reached and how these different factors might change spatially. A similar approach was taken by Pedersen (2008) who addressed these issues in the province of British Columbia, Canada. Moss (2008) identified a number of different uses to which segmentation of consumers has been put in the US power industry but noted that:

   [i]n depth application of market segmentation has only recently
   emerged within the utility sector as a way to implement demand-side
   management programs amongst residential and non-residential
   ratepayers. Greater use of the marketing approach could help the
   state achieve ambitious energy efficiency and conservation goals
   (p.8).

To date, similar attempts have not been made in Australia.

This lack of recognition of differing household preferences for demand management programs has persisted despite the fact that such polices have existed since the 1960-70s (Hamidi et al., 2008) and large amounts of money being invested in demand management initiatives, and government requirements for their use. In the USA, over US$9 billion had been invested in their implementation between the late 1980s and mid 1990s (Eto and Vine, 1996), and by the end of the 1990s, the figure had reached US$18 billion (Eto and Kito, 2000). In Australia, pressure is increasingly being brought to bear on energy suppliers to implement similar strategies. For example, in NSW, the Electricity Supply Act 1995 obliged suppliers to investigate means of implementing demand management strategies (Charles River Associates, 2003). Most other Australian jurisdictions are also reported to have become involved in advocating demand management initiatives (AER, 2008). Further, in Australia, a demand management and planning project was completed under the auspices of a management committee comprising the NSW Department of Planning, EnergyAustralia and TransGrid in 2008 at a cost of $A10 million (DMPP, 2008). In Queensland, Energex has embarked on an ambitious plan to achieve a more sustainable network by 2030 (Energex , 2012). Demand management programs are reported to include conservation and energy efficiency programs, fuel substitution programs, demand response programs, and residential or commercial load management programs (Wong et al., 2010)

Preferences for demand management initiatives across household segments have not previously been widely studied. Feldman and Mast (2001) assessed the use of segmentation in marketing energy efficient lighting. Fritzsche (1981) and Frey and LaBay (1983) examined how electricity consumption and conservation behaviour change over the household lifecycle. The latter two studies provide evidence that changes in consumption are consistent with the stages of the household lifecycle. …

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