Estimating the price elasticity of US electricity demand

V. Kerry Smith

doi:10.1016/0140-9883(80)90002-X

Estimating the price elasticity of US electricity demand

V. Kerry Smith

Economics

Research output: Contribution to journal › Article › peer-review

7 Scopus citations

Abstract

The use of a single electricity price has been seen as a major shortcoming of econometric models of residential electricity demand. It has been suggested that demand estimation should be based on the full rate schedule. This suggestion is evaluated here by examining demand estimates for 27 investor-owned US utilities over the period 1957-1972. The specification errors resulting from using an average revenue price are measured. It is found that statistically valid demand estimated do not necessarily require information on tariff schedules, but that state-wide aggregates of elasticity may often be inapplicable to individual utilities.

Original language	English (US)
Pages (from-to)	81-85
Number of pages	5
Journal	Energy Economics
Volume	2
Issue number	2
DOIs	https://doi.org/10.1016/0140-9883(80)90002-X
State	Published - Apr 1980

ASJC Scopus subject areas

Economics and Econometrics
Energy(all)

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title = "Estimating the price elasticity of US electricity demand",

abstract = "The use of a single electricity price has been seen as a major shortcoming of econometric models of residential electricity demand. It has been suggested that demand estimation should be based on the full rate schedule. This suggestion is evaluated here by examining demand estimates for 27 investor-owned US utilities over the period 1957-1972. The specification errors resulting from using an average revenue price are measured. It is found that statistically valid demand estimated do not necessarily require information on tariff schedules, but that state-wide aggregates of elasticity may often be inapplicable to individual utilities.",

author = "Smith, {V. Kerry}",

note = "Funding Information: Financial assistance was provided bv the Federal Energy Administration, under contract CO-03-50158-00. The views and conclusions presented are those of the author and should not be interpreted as necessarily representing the official policies of the US government. Thanks are due to Charles J. Cicchetti for assistance with the socioeconomic data used in this analysis, to Vivian Carlip for constructive comments on an earlier draft, and to Steven Gold and William Russo for research assistance.",

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N2 - The use of a single electricity price has been seen as a major shortcoming of econometric models of residential electricity demand. It has been suggested that demand estimation should be based on the full rate schedule. This suggestion is evaluated here by examining demand estimates for 27 investor-owned US utilities over the period 1957-1972. The specification errors resulting from using an average revenue price are measured. It is found that statistically valid demand estimated do not necessarily require information on tariff schedules, but that state-wide aggregates of elasticity may often be inapplicable to individual utilities.

AB - The use of a single electricity price has been seen as a major shortcoming of econometric models of residential electricity demand. It has been suggested that demand estimation should be based on the full rate schedule. This suggestion is evaluated here by examining demand estimates for 27 investor-owned US utilities over the period 1957-1972. The specification errors resulting from using an average revenue price are measured. It is found that statistically valid demand estimated do not necessarily require information on tariff schedules, but that state-wide aggregates of elasticity may often be inapplicable to individual utilities.

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Estimating the price elasticity of US electricity demand

Abstract

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