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Energy Demand with Declining Rate Schedules: An Econometric Model for the U.S. Commercial Sector

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  • Frank T. Denton
  • Dean C. Mountain
  • Byron G. Spencer

Abstract

We specify and estimate a model of the demand for electricity and natural gas in commercial buildings using data from the Commercial Building Energy Consumption Survey. Although not observed, declining rate schedules are approximated by a downward sloping function fitted to billing data for individual survey units. Marginal prices (rates), temperature variables and a large number of building characteristics are incorporated into the model as explanatory variables. Demand and rate schedule equations constitute a simultaneous system, with prices and quantities jointly determined. The effects on price elasticities of using (endogenous)marginal rather than (exogenous) average prices are estimated to be quite large.

Suggested Citation

  • Frank T. Denton & Dean C. Mountain & Byron G. Spencer, 2003. "Energy Demand with Declining Rate Schedules: An Econometric Model for the U.S. Commercial Sector," Land Economics, University of Wisconsin Press, vol. 79(1), pages 86-105.
    • Handle: RePEc:uwp:landec:v:79:y:2003:i:1:p:86-105
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    Cited by:

    1. Kim, Jee Young & Oh, Hyungna & Choi, Kyung-Mee, 2019. "Why Are Peak Loads Observed during Winter Months in Korea?," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 41(1), pages 43-58.
    2. Cao, K.H. & Qi, H.S. & Li, R. & Woo, C.K. & Tishler, A. & Zarnikau, J., 2023. "An experiment in own-price elasticity estimation for non-residential electricity demand in the U.S," Utilities Policy, Elsevier, vol. 81(C).
    3. Yueming Qiu, 2014. "Energy Efficiency and Rebound Effects: An Econometric Analysis of Energy Demand in the Commercial Building Sector," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(2), pages 295-335, October.
    4. Li, Raymond & Woo, Chi-Keung & Tishler, Asher & Zarnikau, Jay, 2022. "Price responsiveness of commercial demand for natural gas in the US," Energy, Elsevier, vol. 256(C).
    5. Liang, Jing & Qiu, Yueming & James, Timothy & Ruddell, Benjamin L. & Dalrymple, Michael & Earl, Stevan & Castelazo, Alex, 2018. "Do energy retrofits work? Evidence from commercial and residential buildings in Phoenix," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 726-743.
    6. Keighton R. Allen & Thomas M. Fullerton, 2019. "Metropolitan Evidence Regarding Small Commercial and Industrial Electricity Consumption," International Journal of Energy Economics and Policy, Econjournals, vol. 9(6), pages 1-11.
    7. Contreras, Sergio & Smith, Wm. Doyle & Fullerton, Thomas M., Jr., 2010. "U.S. commercial electricity consumption," MPRA Paper 34855, University Library of Munich, Germany, revised 22 May 2011.
    8. Heshmati, Almas, 2012. "Survey of Models on Demand, Customer Base-Line and Demand Response and Their Relationships in the Power Market," IZA Discussion Papers 6637, Institute of Labor Economics (IZA).
    9. Almas Heshmati, 2014. "Demand, Customer Base-Line And Demand Response In The Electricity Market: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 862-888, December.

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    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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