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Weather Normalization andNatural Gas Regulation

Richard S. Bower and Nancy L. Bower

Year: 1985
Volume: Volume 6
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol6-No2-8
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Abstract:
The residential demand for natural gas is the subject of two recent articles in this journal.' Each used pooled time-series/cross-section data to estimate price and income elasticities as well as other relationships that determine the quantity of natural gas consumed by individual households or groups of households. Not surprisingly, among relationships other than price or income, the most important links consumption to weather conditions .2 Regulating natural gas distribution companies requires that this dependence of consumption on weather conditions be recognized and reflected in ratemaking. If it is not (or if it is recognized incorrectly) the regulator will approve prices and revenues that make expected return on utility investment either greater or smaller than allowed return.



The Demand for Natural Gas: A Survey of Price and Income Elasticities

Mohammed A. Al-Sahlawi

Year: 1989
Volume: Volume 10
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol10-No1-7
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Abstract:
My purpose has been to survey and review price and income elas-ticities of the demand for natural gas. The surveyed studies are classified by demand type, where the functional forms, estimation techniques, data types, estimated periods and concerned countries or regions are indicated. Studies have demonstrated that there is variation in price and income elasticity estimates. These discrepancies are due to differing estimated periods, various data sources, structural changes, geographical differentials, and the distinction between different demand types. In the short run, it appears that industrial demand and residential-commercial demand are inelastic with respect to price and income. Industrial demand is more responsive to income than residential-comercial demand in the short run as well as in the long run. This might be caused by the differences between natural gas end uses.



Price Elasticities of Natural Gas Demand in France and West Germany

Javier Estrada and Ole Fugleberg

Year: 1989
Volume: Volume 10
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol10-No3-5
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Abstract:
This article analyzes the own-price elasticities of natural gas and cross-price elasticities between gas and other fuels in France and West Germany. A model with constant substitution elasticities would not give enough information to study interfuel competition. Therefore we adopted a model based on translog functions, which has few restrictions on measuring elasticities of energy demand.



Micro Econometric Modelling of Household Energy Use: Testing for Dependence between Demand for Electricity and Natural Gas

Soren Leth-Petersen

Year: 2002
Volume: Volume23
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol23-No4-3
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Abstract:
This paper contains a micro econometric analysis of household electricity and natural gas demand for a cross section of 2,885 Danish households observed in 1996. The sample includes fulltime employed couples in single family houses. The specification of the model is guided by an explorative nonparametric data analysis. The analysis reveals, among other things, the fairly surprising result that demand for heating is unaffected by the number of children in the household. The dependence between demand for gas and demand for electricity is examined in the paper. This is done by testing for separability of demand for gas from demand for electricity, and vice versa. Separability of electricity (gas) from gas (electricity) is tested by estimating demand for electricity (gas) conditional on demand for gas (electricity). The model allows for endogeneity of the conditional variable. Building regulations and individual time variation, that is panel data, identify the test. The test indicates that demand for electricity is separable from demand for natural gas, and that demand for natural gas is separable from demand for electricity. The result of the test is evidence in favour of single equation modelling of household energy demand in this context.





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