Price Reform and Household Demand for Electricity
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 utilize solar water heating being more price elastic than households that utilize air conditioning and electric water heating electric 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.
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