Change in consumer sensitivity to electricity prices in response to retail deregulation: A panel empirical analysis of the residential demand for electricity in the United States

Tadahiro Nakajima and Shigeyuki Hamori

Energy Policy, 2010, vol. 38, issue 5, 2470-2476

Abstract: About ten years have passed since the deregulation of the U.S. retail electricity market, and it is now generally accepted that the available data is adequate to quantitatively assess and compare conditions before and after deregulation. This study, therefore, estimates the changes in price elasticity in the residential electricity market to examine the changes, if any, in household sensitivity (as a result of retail electricity market deregulation policies) to residential electricity rates. Specifically, six types of panel data are prepared, based on three cross-sections--all states (except for Alaska and Hawaii) and the District of Columbia, deregulated states, and non-deregulated states--and two time series--the period before deregulation and the period after deregulation. The panel empirical analysis techniques are used to determine whether or not the variables are stationary, and to estimate price elasticity. We find that there is no substantial difference in the price elasticity between deregulated and non-deregulated states for both periods--before deregulation and after deregulation. Thus, it can be said that the deregulation of the retail electricity market has not made consumers more sensitive to electricity rates and that retail deregulation policies are not the cause of price elasticity differences between deregulated and non-deregulated states.

Keywords: Residential; electricity; Retail; deregulation; Panel; cointegration (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (48)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301-4215(09)00997-5
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:38:y:2010:i:5:p:2470-2476

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().