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Changes in Electricity Demand in the United States from the 1970s to 2003

Abstract:
Gaining a better understanding of how electricity demand has changed over the past three decades, particularly in light of government involvement in influencing electricity demand, is an important step towards shaping energy policy in the U.S. and internationally. This study of U.S. electricity demand finds that those states that have moderate to strong commitment to energy efficiency programs reduce electricity intensity relative to what it would have been with weak program commitment; in the residential sector by 4.4 percent, in the commercial sector by 8.1 percent, and in the industrial sector by 11.8 percent. The findings are similar with respect to levels of electricity consumption in the commercial and industrial sectors, but not the residential sector. Moreover, the evidence in this paper indicates that energy efficiency program commitment in all three sectors of the U.S. economy has transformed electricity demand with respect to three key economic variables; electricity price, income as measured by per capita income or gross state product, and technological change. Also, this study finds that nationwide spillover from energy efficiency programs may be rapid and ubiquitous in the residential sector. Estimates of the impact of California�s energy efficiency programs confirm the speculation that these efforts have dramatically reduced state electricity intensity; to date, these impacts are likely the upper bounds of the impacts of strong state-level energy efficiency program commitment.

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Energy Specializations: Energy Efficiency; Electricity – Markets and Prices ; Electricity – Policy and Regulation

JEL Codes:
Q55 - Environmental Economics: Technological Innovation
D42 - Market Structure, Pricing, and Design: Monopoly
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Electricity demand, decomposition, DSM, energy efficiency, US

DOI: 10.5547/ISSN0195-6574-EJ-Vol28-No3-6


Published in Volume 28, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.