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Price reform and household demand for electricity

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  • Carter, Adrian
  • Craigwell, Roland
  • Moore, Winston

Abstract

This paper uses an estimated model of residential electricity demand to examine the impact of proposed tariff changes on a representative sample of 130 Barbadian households. The estimated equation results suggest that the price elasticities of demand for particular appliances varied significantly, with households that utilise solar water heating being more price elastic than households that utilise air conditioning and electric water heating. The income effects were, however, statistically insignificant, as they may have been captured by choices of appliances rather than utilisation. The estimated model results were then employed to examine the effect of a proposed change in the tariff structure for electricity in Barbados. The simulated results seem to indicate that changes in the electricity rate structure are likely to have very little impact on households demand for electricity. However, changes in consumption patterns could occur within upper consumption and upper income households.

Suggested Citation

  • Carter, Adrian & Craigwell, Roland & Moore, Winston, 2012. "Price reform and household demand for electricity," Journal of Policy Modeling, Elsevier, vol. 34(2), pages 242-252.
    • Handle: RePEc:eee:jpolmo:v:34:y:2012:i:2:p:242-252
    DOI: 10.1016/j.jpolmod.2011.08.006
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    4. Chalal, Moulay Larbi & Benachir, Medjdoub & White, Michael & Shahtahmassebi, Golnaz & Cumberbatch, Miranda & Shrahily, Raid, 2017. "The impact of the UK household life-cycle transitions on the electricity and gas usage patterns," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 505-518.
    5. Ohler, Adrienne M. & Billger, Sherrilyn M., 2014. "Does environmental concern change the tragedy of the commons? Factors affecting energy saving behaviors and electricity usage," Ecological Economics, Elsevier, vol. 107(C), pages 1-12.
    6. Youn, Hyungho & Jin, Hyun Joung, 2016. "The effects of progressive pricing on household electricity use," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1078-1088.
    7. Michael Chesser & Jim Hanly & Damien Cassells & Nikolaos Apergis, 2019. "Household Energy Consumption: A Study of Micro Renewable Energy Systems in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 50(2), pages 265-280.
    8. Guo, P. & Lam, J. & Li, V., 2018. "A novel machine learning approach for identifying the drivers of domestic electricity users’ price responsiveness," Cambridge Working Papers in Economics 1844, Faculty of Economics, University of Cambridge.
    9. Jones, Rory V. & Fuertes, Alba & Lomas, Kevin J., 2015. "The socio-economic, dwelling and appliance related factors affecting electricity consumption in domestic buildings," Renewable and Sustainable Energy Reviews, Elsevier, vol. 43(C), pages 901-917.
    10. Çetinkaya, Murat & Başaran, Alparslan A. & Bağdadioğlu, Necmiddin, 2015. "Electricity reform, tariff and household elasticity in Turkey," Utilities Policy, Elsevier, vol. 37(C), pages 79-85.
    11. Jacques Fotso, Willy & Mvogo, Gregory & Bidiasse, Honoré, 2023. "Household access to the public electricity grid in Cameroon: Analysis of connection determinants," Utilities Policy, Elsevier, vol. 81(C).
    12. Ohler, Adrienne M. & Loomis, David G. & Ilves, Kadi, 2020. "A study of electricity savings from energy star appliances using household survey data," Energy Policy, Elsevier, vol. 144(C).
    13. Moore, Alvon, 2011. "Demand elasticity of oil in Barbados," Energy Policy, Elsevier, vol. 39(6), pages 3515-3519, June.
    14. Cansino, José M. & Dugo, Víctor & Gálvez-Ruiz, David & Román-Collado, Rocío, 2023. "What drove electricity consumption in the residential sector during the SARS-CoV-2 confinement? A special focus on university students in southern Spain," Energy, Elsevier, vol. 262(PB).
    15. Zhang, Xinhua & Hueng, C. James & Lemke, Robert J., 2023. "A self-selection pricing mechanism for residential electricity: Measures of sustainability and equity to balance market mechanisms and government controls," Journal of Policy Modeling, Elsevier, vol. 45(6), pages 1167-1183.
    16. Hassen, Sied & Beyene, Abebe D. & Jeuland, Marc & Mekonnen, Alemu & Meles, Tensay Hadush & Sebsibie, Samuel & Klug, Thomas & Pattanayak, Subhrendu K. & Toman, Michael A., 2022. "Effect of electricity price reform on households’ electricity consumption in urban Ethiopia," Utilities Policy, Elsevier, vol. 79(C).
    17. Boukarta Soufiane & Berezowska-Azzag Ewa, 2018. "Assessing Households’ Gas and Electricity Consumption: A Case Study of Djelfa, Algeria," Quaestiones Geographicae, Sciendo, vol. 37(4), pages 111-129, December.
    18. Sequeira, Tiago Neves & Santos, Marcelo Serra, 2018. "Does country-risk influence electricity production worldwide?," Journal of Policy Modeling, Elsevier, vol. 40(4), pages 730-746.

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    More about this item

    Keywords

    Electricity demand; Heckman estimator; Developing country;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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