Power TAC customers are being "trapped" by signup bonuses
Dear colleagues -
Some of you have complained about the fact that customers are being attracted by tariffs with high signup bonuses accompanied by high per-kWh prices. While there is nothing wrong with either signup bonuses or high prices, we feel that customers are not correctly evaluating alternative tariffs in this situation. The problem is that the customer evaluates the signup bonus over a relatively short time horizon, finds the tariff attractive and subscribes, but fails to re-evaluate its options when it should due to a high inertia factor. We are concerned that this effect could seriously distort the results of this year's competition.
I have implemented a fix, which is to multiply inertia by a factor (default value is zero) in the case where the current tariff has a positive signup payment. This represents a level of suspicion on the part of the customer about the real value of a signup bonus. I ran a test in which the sample broker offers an extra CONSUMPTION tariff late on the first day with a relatively high price accompanied by a signup bonus that will more than offset the extra energy cost for the smaller customers (households, EVs, and some of the office-complex models) over a one-week period. Without the change, most of the customer immediately subscribe to this tariff, then very slowly abandon it. Most stay with the tariff for a much longer period than is justified by the signup bonus. With the change, most customers immediately subscribe, then unsubscribe at the next tariff-evaluation interval. They then re-subscribe slowly (because of the high inertia for tariffs without signup bonuses) and again unsubscribe quickly. This behavior can easily be suppressed by adding a non-zero minDuration and an early-withdrawal penalty, but that in turn will make the tariff less attractive.
We have evaluated the schedule for the final round, and given the fact that we now have only seven brokers, we don't need the full 16 days original scheduled; a little over six days will give us three full sets each of 3, 5, and 7 brokers. So our proposal is to cut the current seeding round short, deploy the update, and run a shortened seeding round, followed by a 7-day final round. The update is already pushed to github (it's in server-interface), so if you are testing with a server source environment you can pull it down now and check it out.
Wolf and Govert will follow up shortly with the exact updated schedule.
As always, we welcome your thoughts and suggestions.
Yes, the latest changes are deployed as 1.3.3-SNAPSHOT. If you want to see exactly what was changed, look at the revision history on the server-interface module.
At this point, I decided that the change would be slightly less disruptive, and more realistic, if the inertia was not set back all the way to zero for customers who have subscribed to a tariff with a signup bonus (positive signup payment). So the default value for the adjustment factor is now 0.1, which means customers who are subscribed to such tariffs are 10 times more likely than normal to re-evaluate.
Once next week's seeding round is underway, we'll monitor the system, and if everything is working well, I'll do a 1.3.3 release later in the week. Of course, we are always open to suggestions and issue reports from the community.