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An analysis of elasticity of electricity demand in West Bengal, India: Some policy lessons learnt

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  • Saha, Debalina
  • Bhattacharya, Rabindra N.

Abstract

This paper estimates price and income elasticities of electricity demand for four consumer categories, Agriculture, Commerce, Industry and Domestic, for two major utilities (one public and the other private) that supply electricity in West Bengal, India. We use panel data analysis covering 15 years for the four consumer categories. The comparison of the responsiveness in demand due to changes in tariff for the two utilities reveals some interesting differences in the demand pattern of the consumers served by the different utilities when the private sector supplies to the highly urbanized areas and the public sector supplies to the rest of the state. We get an idea about the difference in tariff structure of a public and a private utility as well. Our study suggests that any policy to entirely remove the cross subsidy is not a viable option as there is considerable differences in the elasticity of demand for power among the different category of consumers. Further, for the success of the policy of ‘open access’ which is an important and integral part of the power sector reform some regulatory mechanism is required to control market power in the power sector.

Suggested Citation

  • Saha, Debalina & Bhattacharya, Rabindra N., 2018. "An analysis of elasticity of electricity demand in West Bengal, India: Some policy lessons learnt," Energy Policy, Elsevier, vol. 114(C), pages 591-597.
    • Handle: RePEc:eee:enepol:v:114:y:2018:i:c:p:591-597
    DOI: 10.1016/j.enpol.2017.12.035
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    References listed on IDEAS

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    Cited by:

    1. Jia, Zhijie & Lin, Boqiang, 2021. "The impact of removing cross subsidies in electric power industry in China: Welfare, economy, and CO2 emission," Energy Policy, Elsevier, vol. 148(PB).
    2. Jerzy Andruszkiewicz & Józef Lorenc & Agnieszka Weychan, 2019. "Demand Price Elasticity of Residential Electricity Consumers with Zonal Tariff Settlement Based on Their Load Profiles," Energies, MDPI, vol. 12(22), pages 1-22, November.
    3. Gautam, Tej K. & Paudel, Krishna P., 2018. "Estimating sectoral demands for electricity using the pooled mean group method," Applied Energy, Elsevier, vol. 231(C), pages 54-67.
    4. Devkota, Laxmi P. & Bhattarai, Utsav & Khatri, Pawan & Marahatta, Suresh & Shrestha, Dibesh, 2022. "Resilience of hydropower plants to flow variation through the concept of flow elasticity of power: Theoretical development," Renewable Energy, Elsevier, vol. 184(C), pages 920-932.
    5. Saha, Debalina & Bhattacharya, Rabindra N., 2019. "Analysis of the welfare implications of power-sector restructuring in West Bengal, India," Utilities Policy, Elsevier, vol. 56(C), pages 62-71.

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    More about this item

    Keywords

    Elasticity of demand; Panel data regression; Public and private utilities;
    All these keywords.

    JEL classification:

    • C - Mathematical and Quantitative Methods
    • D - Microeconomics
    • L - Industrial Organization
    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics

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