Can We Confront Climate Change by Picking up $20 Bills in Houses? Experimental Evidence on Programs to Reduce Residential Sector Energy Consumption

2016-07-13

2017-01-31

audit take-up, self-selection into program participation, investment take-up, electricity use, natural gas use, cost of investment

The BGE Smart Energy Savers and Home Performance with Energy Star (HPwES) programs are energy efficiency programs in place under Baltimore Gas & Electric and the State of Maryland. HPwES offers Home Performance Energy Audits to BGE customers, involving an assessment of potential home energy efficiency improvements by a certified contractor. The program then offers rebates specific to a variety of investments in air sealing, insulation measures, duct sealing, and upgrades to heating and air conditioning equipment. This experiment offers additional linear rebates to reduce the prices of the audits and investments for select customers.

The goal of this experiment is to test the cost-effectiveness of home energy efficiency improvements under the HPwES program. Furthermore, we are examining the effects of various financial incentives offered at the audit and investment stages and benefit framings to yield insight on what factors inform a customer’s decision to invest in home energy efficiency.

The first element of the experiment is an academic phone survey, which asks customers about home energy use and habits. We are collecting 1000 phone survey responses. After the phone survey, 75,000 BGE customers will receive mailing letters advertising HPwES and offering incentives for audits and investments to select customers. Some of these mailing letters will be accompanied by buck slip inserts, documenting either the environmental benefits of investing in energy efficiency, or the process involved in making an investment. A portion of the households that receive mailing letters will also receive a phone call one month after letter receipt, which reminds the customers about the program and the incentives they may have been offered. Another subset of the mailing letter treatment group will receive structured follow-up after receiving an audit, should they choose to do so. This will include a phone call and email focusing on next steps for investment. The mailing letters will be sent out in four waves over six months. We will be collecting data on energy use for the entire pool of homes for two years following efficiency improvements that customers choose to make.

The treatment groups were selected using a randomization performed using Stata. We randomly selected each treatment group 500 times and balanced over the following variables: household electricity use, household natural gas use, household winter electricity use, household winter natural gas use, household summer electricity use, household square footage, and the year a home was built. We then selected the best of the 500 treatment assignments.

Randomization was performed at the household level.

No

N/A

338,405

1000 households take academic phone survey
337,405 phone survey control

75,000 households receive mailing letters
263,405 mailing letter controls (no mailing letter or mailing letter sub-treatments)

Treatments within mailing letter group:
• 37,500 households receive financial benefit framing (explains financial benefits of energy efficiency)
• 37,500 households receive comfort benefits framing (energy efficiency improves indoor air quality)
• 37,500 households receive social norm treatment (tells customers that other people are making these investments)
• 18,000 households receive $50 audit rebate offer
• 12,000 households receive $100 rebate offer
• 7,500 households receive investment financial incentives averaging $1000
• 4,500 households receive investment financial incentives averaging $2000
• 37,500 households receive credit information
• 37,500 households receive process buckslip (depicts process of receiving an audit and making an investment)
• 12,500 households receive local environmental buckslip (benefits of energy efficiency for local environmental quality in qualitative terms)
• 12,500 households receive local quantitative environmental buck slip (benefits of energy efficiency for local environmental quality in quantitative terms)
• 12,500 households receive global environmental buck slip (benefits of energy efficiency for global environmental quality in qualitative terms)
• 12,500 households receive global quantitative environmental buck slip (benefits of energy efficiency for global environmental quality in quantitative terms)
• 25,000 households receive outbound phone call after receipt of mailing letter encouraging audits
• 37,500 households receive structured follow up after audit (includes phone call and email discussing investment)