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Household Electricity Demand, Revisited

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  • Reiss, Peter C.

    (Stanford U)

  • White, Matthew W.

Abstract

Recent efforts to restructure electricity markets have renewed interest in assessing how consumers respond to price changes. This paper develops a model for evaluating the effects of alternative tariff designs on residential electricity use. The model concurrently addresses several inter-related diffi- culties posed by nonlinear pricing, heterogeneity in consumer price sensitivity, and consumption aggregation over time. We estimate the model using extensive data for a representative sample of 1,300 California households. The results imply a strikingly skewed distribution of household electricity price elasticities in the population, with a small fraction of households accounting for most aggregate demand response. We then estimate the aggregate and distributional consequences of recent tariff structure changes in California, the consumption effects of which have been the subject of considerable debate.

Suggested Citation

  • Reiss, Peter C. & White, Matthew W., 2002. "Household Electricity Demand, Revisited," Research Papers 1830, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:1830
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    References listed on IDEAS

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    Cited by:

    1. Dalton, Christina M., 2014. "Estimating demand elasticities using nonlinear pricing," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 178-191.
    2. Gyamfi, Samuel & Krumdieck, Susan & Urmee, Tania, 2013. "Residential peak electricity demand response—Highlights of some behavioural issues," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 71-77.
    3. Tosapol Apaitan & Thiti Tosborvorn & Wichsinee Wibulpolprasert, 2020. "Bunching for Free Electricity," PIER Discussion Papers 136, Puey Ungphakorn Institute for Economic Research.
    4. Venizelou, Venizelos & Makrides, George & Efthymiou, Venizelos & Georghiou, George E., 2020. "Methodology for deploying cost-optimum price-based demand side management for residential prosumers," Renewable Energy, Elsevier, vol. 153(C), pages 228-240.
    5. Athukorala, P.P.A Wasantha & Wilson, Clevo, 2010. "Estimating short and long-term residential demand for electricity: New evidence from Sri Lanka," Energy Economics, Elsevier, vol. 32(Supplemen), pages 34-40, September.
    6. Yan, Xing & Ozturk, Yusuf & Hu, Zechun & Song, Yonghua, 2018. "A review on price-driven residential demand response," Renewable and Sustainable Energy Reviews, Elsevier, vol. 96(C), pages 411-419.
    7. Maria P. Pablo-Romero & Antonio Sánchez-Braza & Javier Sánchez-Rivas, 2017. "Relationships between Hotel and Restaurant Electricity Consumption and Tourism in 11 European Union Countries," Sustainability, MDPI, vol. 9(11), pages 1-14, November.
    8. Nidhi Tewathia, 2018. "Consumption Behaviour and Conservation of Household Electricity in Delhi: A Factor Analysis Approach," Asian Bulletin of Energy Economics and Technology, Asian Online Journal Publishing Group, vol. 4(1), pages 22-35.
    9. Tewathia, Nidhi, 2015. "Explaining the Awareness and Attitude of the Delhi Households in context of Electricity Consumption," MPRA Paper 64854, University Library of Munich, Germany.

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