Demand and Pricing in Electricity Markets: Evidence from San Diego During California's Energy Crisis

Posted: 2 Feb 2004

See all articles by Peter C. Reiss

Peter C. Reiss

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Matthew W. White

University of Pennsylvania - Business & Public Policy Department; National Bureau of Economic Research (NBER)

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Abstract

We study the electricity consumption of San Diego-area households following a series of price changes and related events during California's energy crisis in 2000-01. The analysis uses a five-year panel of disaggregate billing and weather data for a random sample of 70,000 households. In contrast to prior work, these data allow us to proceed without behavioral assumptions regarding a consumer's knowledge of energy prices. We find that after a rapid price increase in summer 2000, consumption fell substantially over about 60 days, averaging 12 to 13% per household; consumption then rebounded to within 3% of pre-crisis levels after a price cap was imposed. Under the price cap, public appeals for energy conservation and a remunerative voluntary conservation program had significant, but transitory, effects. Further, a large share of households reduced electricity consumption substantially (over 10%) but saved small monetary amounts ($10 or less). Overall, the results indicate consumers may be far more responsive to pecuniary and non-pecuniary incentives for altering their energy use than is commonly believed.

Suggested Citation

Reiss, Peter C. and White, Matthew Wallace, Demand and Pricing in Electricity Markets: Evidence from San Diego During California's Energy Crisis. Available at SSRN: https://ssrn.com/abstract=491762

Peter C. Reiss (Contact Author)

Stanford Graduate School of Business ( email )

Stanford, CA 94305-5015
United States
650-725 2759 (Phone)
650-725-7979 (Fax)

HOME PAGE: http://www.stanford.edu/~preiss

National Bureau of Economic Research (NBER)

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Matthew Wallace White

University of Pennsylvania - Business & Public Policy Department ( email )

The Wharton School
3100 Steinberg Hall-Dietrich Hall
Philadelphia, PA 19104-6372
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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