How price responsive is industrial demand for electricity in the United States?

Raymond Li; Chi Keung Woo; Asher Tishler; Jay Zarnikau

doi:10.1016/j.tej.2022.107141

How price responsive is industrial demand for electricity in the United States?

Raymond Li, Chi Keung Woo, Asher Tishler, Jay Zarnikau^*

^*Corresponding author for this work

Coller School of Management

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

2 Scopus citations

Abstract

We use five parametric specifications and monthly data for the lower 48 states in 2001–2019 to document that industrial demand for electricity in the United States (US) is price inelastic, with statistically significant (p-values ≤ 0.05) estimates of − 0.029 to − 0.130 for the static own-price elasticity, − 0.021 to − 0.133 for the short-run own-price elasticity, and − 0.043 to − 0.214 for the long-run own-price elasticity. Absent significant price escalation (e.g., 10% per year), the US industrial customer class's price-induced conservation of electricity is likely modest, justifying the continued use of energy efficiency standards and demand side management programs to achieve deep decarbonization.

Original language	English
Article number	107141
Journal	Electricity Journal
Volume	35
Issue number	6
DOIs	https://doi.org/10.1016/j.tej.2022.107141
State	Published - Jul 2022

Keywords

Industrial electricity demand
Panel data analysis
Price elasticity
United States

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Access to Document

10.1016/j.tej.2022.107141

Cite this

@article{e32af1ef451f462fb9e1fd9c0a74d28f,

title = "How price responsive is industrial demand for electricity in the United States?",

abstract = "We use five parametric specifications and monthly data for the lower 48 states in 2001–2019 to document that industrial demand for electricity in the United States (US) is price inelastic, with statistically significant (p-values ≤ 0.05) estimates of − 0.029 to − 0.130 for the static own-price elasticity, − 0.021 to − 0.133 for the short-run own-price elasticity, and − 0.043 to − 0.214 for the long-run own-price elasticity. Absent significant price escalation (e.g., 10% per year), the US industrial customer class's price-induced conservation of electricity is likely modest, justifying the continued use of energy efficiency standards and demand side management programs to achieve deep decarbonization.",

keywords = "Industrial electricity demand, Panel data analysis, Price elasticity, United States",

author = "Raymond Li and Woo, {Chi Keung} and Asher Tishler and Jay Zarnikau",

note = "Publisher Copyright: {\textcopyright} 2022",

year = "2022",

month = jul,

doi = "10.1016/j.tej.2022.107141",

language = "אנגלית",

volume = "35",

journal = "Electricity Journal",

issn = "1040-6190",