Household Electricity Demand, Revisited

Recent efforts to restructure electricity markets have renewed interest in assessing how consumers respond to price changes. This paper develops a model for evaluating the effects of alternative tariff designs on electricity use. The model concurrently addresses several interrelated difficulties posed by nonlinear pricing, heterogeneity in consumer price sensitivity, and consumption aggregation over appliances and time. We estimate the model using extensive data for a representative sample of 1300 California households. The results imply a strikingly skewed distribution of household electricity price elasticities in the population, with a small fraction of households accounting for most aggregate demand response. We then estimate the aggregate and distributional consequences of recent tariff structure changes in California, the consumption effects of which have been the subject of considerable debate.     

Helping "light green" consumers walk the talk: Results of a behavioural intervention survey in the Swiss electricity market

While many consumer surveys show very positive attitudes towards renewable energy, the share of consumers actually purchasing green electricity is still in the single-digit percent range in most countries. What can be done to help consumers with positive attitudes towards green electricity to “walk the talk”, i.e. to behave consistently with their preferences? We developed a psychological model based on the theory of planned behaviour (TPB) to design a large-scale behavioural intervention survey with 1163 Swiss electricity consumers. Our results show that by providing information targeted at the key factors influencing the intention to purchase green electricity, namely attitudes towards purchase, social norms and perceived behavioural control, a significant increase in green electricity market share can be achieved. Our results show that price is not the only barrier to purchasing green electricity, and that information to increase the perceived benefit of buying green electricity as well as targeted communication to overcome inertia among retail electricity consumers are equally important factors.     

Household Response to Optional Peak-Load Pricing of Electricity

I investigate the impacts of voluntary time-of-day (TOD) rates on residential demand for electricity. My analysis is based on a sample of a survey, which provides cross-sectional data on electricity consumption and economic/demographic features for both TOD and non-TOD households in Japan. This information is used to develop an almost ideal demand system for the TOD electricity consumption during the summer. The results show that (1) household response to the high price of the peak period is relatively modest, and (2) the relative magnitudes of the price and selection effects depend on the ownership of water heaters.     

Conservation: From Voluntary Restraint to a Voluntary Price Premium

This paper investigates how concern for the environment translates into predictable patterns of consumer behavior. Two types of behavior are considered. First, individuals who care about environmental quality may voluntarily restrain their consumption of goods and services that generate a negative externality. Second, individuals may choose to pay a price premium for goods and services that are more environmentally benign. A theoretical model identifies a symmetry between such voluntary restraint and a voluntary price premium that mirrors the symmetry between environmental policies based on either quantities (quotas) or prices (taxes). We test predictions of the model in an empirical study of household electricity consumption with introduction of a price-premium, green-electricity program. We find evidence of voluntary restraint and its relation to a voluntary price premium. The empirical results are consistent with the theoretical model of voluntary conservation.      

Determinants of price elasticities for private labels and national brands of cheese

An Almost Ideal Demand System model is developed and used to estimate price elasticities for US cheese sold at retail. Growing consumption of cheese coupled with fierce competition between private labels and national brands serves as motivating factors for this study. Per capita consumption of cheese grew by 75% during 1980–2004 and private labels captured a rising share of this growth. Private labels today account for 35% of market share; national brands, for the remaining 65%. Kraft accounts for 45% of national brands, but price increases for Kraft brands led to a sizeable price gap between its brands and private labels. This gap helped to stimulate growth of private labels. Marketing managers seek to capitalize on both growing cheese sales and price gaps for brands. Relevant information for marketing managers is consumer sensitivity to price changes. This study uses 69 weeks of scanner data, with consumers segmented by income levels to derive price elasticities for both lower-and higher-income consumers. Results show lower-income consumers to be more price sensitive. If large price gaps are maintained, the results suggest continued growth of private labels. Yet, meta-analyses for this study suggest that Kraft could lower the price gap and regain market share.     

参考价格影响下的两阶段回报型众筹定价策略研究

在众筹发起过程中,策略型消费者将对比众筹价格与零售价格,选择最优购买时机。基于此背景,构建了参考价格效应影响下的两阶段众筹定价模型,设计了众筹发起人的两阶段动态定价策略。发起人根据消费者的耐心程度和参考价格效应强度,选择是否公布零售价格,以及溢价或降价销售。利用理性预期均衡理论和逆向归纳法,得到了发起人与消费者博弈的均衡价格和最优发起策略。结论表明,发起人的策略选择并非单一的,同时受到消费者耐心程度和参考价格效应强度的影响。为众筹发起人的两阶段价格决策提供了理论参考和管理学建议。     

绿色低碳产品消费市场活力激发研究——基于绿色家电产品的演化博弈

激发绿色低碳产品消费市场活性,对拉动上游企业低碳减排,促进低碳供应链发展具有重要作用。基于演化博弈理论,构建了政府、家电企业、消费者三方博弈模型,探索各主体策略选择及演化稳定路径,并以实际数据进行验证。研究结果表明:政府低碳决策主要受家电企业低碳决策影响,家电企业低碳决策主要受消费者低碳决策影响,消费者低碳决策受政府及家电企业决策共同影响;家电企业低碳成本、政府不监管时消费者选择低碳消费带来的家电企业额外收益、绿色家电与非绿色家电价格差、消费者低碳消费环境保护效用是促进模型向政府不用监管、家电企业积极提供绿色家电、消费者主动选择低碳消费的理想稳定状态演化的重要决定因素。为此,政府应对企业减排成本合理补贴并加强宣传教育,家电企业应扩大低碳产品供给,提高低碳产品性价比,消费者应进一步提升低碳环保意识,树立低碳消费理念,践行低碳消费。     

电力市场中计及实时电价的电力系统运行风险管理新策略

针对电力市场中用户对实时电价的反应,本文提出一种计及实时电价的电力系统运行风险管理新策略。该策略在评估电力系统运行风险的基础上,对实时电价进行调节,并以电价为信号,刺激用户采取合理的用电结构和方式,从而增强电力系统运行的可靠性。该方法只是弥补了传统方法无法考虑系统运行可靠性的不足,而并非颠覆传统的电价管理方法,所以二者具有很好的衔接性。最后,通过对IEEPRTS测试系统的可靠性进行计算分析,验证了所提算法的有效性。     

Long- and short-run elasticities of residential electricity consumption in China: a partial adjustment model with panel data

While it has stabilized in developed world, the per capita residential electricity consumption (REC) in developing countries such as China is growing very rapidly and this trend is very likely to continue. Built upon a provincial level panel data, we employ a partial adjustment model to investigate the future trend of REC in China and factors that affect it. We estimate the income and price short-term and long-term elasticities for urban and rural China, respectively and compare the results with REC studies in other countries or regions. The findings provide useful information to understand how the REC would grow in China as household income increases and how effective that price could be as an intervention tool.     

Product recall with symmetric uncertainty and multiunit purchases

A common view in retail electricity markets is that retailers discriminate based on consumers’ loyalty: loyal consumers pay more and switchers can (and do) select the cheapest offers) when they switch. The premium is colloquially known as a “loyalty tax” or “loyalty premium”. Reflecting this understanding Australia’s governments, regulators and consumer advocates have encouraged consumers to switch electricity retailers. Using a sample of 47,114 household electricity bills we test whether consumers that had switched in the previous 12 months (“switchers”) pay less than consumers who remained with their retailers (“remainers”) in the previous 12 months. We find that the annual bills of switchers are expected to be AU$48 (4%) lower than remainers and that the median switcher could reduce their bills by 21% by selecting the cheapest offer. Classifying retailers into tiers however provides some nuance to the main conclusion: the third tier of retailers (the new entrants with market shares of less than 3%) impose higher loyalty taxes than the other two tiers (incumbents and mid-sized retailers). The middle tier of retailers impose the lowest loyalty tax, and in fact for many consumers they may reward loyalty. These findings suggest that the loyalty tax is (typically) smaller than widely considered, it varies across tiers of retailers and even engaged consumers typically do not select the lowest priced offer. This raises the question of whether switchers are motivated by lower bills as well as other factors or whether the main challenge is search difficulties.

     

Convergence clustering in the Chinese provinces: New evidence from several macroeconomic indicators

In this paper, the convergence clustering in 31 Chinese provinces regarding several important economic indicators over the period 1952 to 2016 was empirically investigated. Several provincial clusters were identified in the per capita (real) gross domestic product (GDP), consumption–income ratio, retail price, and consumer price inflation rates, using a club convergence and clustering procedure. The empirical findings are as follows. First, it was found that all series of the original data contain a significant nonlinear component. Second, it was observed that there are five significant clusters for the per capita income in China. Third, it was found that there are four significant clusters for the consumption–income ratio. Fourth, it was observed that there are four significant clusters for the retail inflation rates and two significant clusters for the consumer inflation rates in China. These results will enable local and central planners to implement economic growth, savings and price adjustment policies for different groups of provinces.     

公正性、递增定价机制与家庭规模

资源定价与收入税成为实现分配公正的互补机制。当消费者收入信息不对称时,经典两部制不能同时实现消费公平和收益中性。通过降低进入门槛和提高边际价格的修正性两部制可挽留低收入消费者,却对次低收入消费者不公。连续递增定价通过完美甄别消费者支付能力能兼顾收益中性和成本的公平补偿。最后,与家庭收入逆相关的私有家庭规模信息会削弱修正性两部制的功效。     

ON THE PROFITABILITY OF RESALE PRICE MAINTENANCE WHEN DEMAND IS UNCERTAIN

A previous study finds that in a market where a manufacturer faces uncertain demand and sells to consumers through competitive retailers, the manufacture wishes to support adequate retail inventories by imposing resale price maintenance (RPM). I show that if retail inventories are allocated to consumers through first‐come‐first‐served rule rather than efficient rationing rule in the game with unconstrained retail competition, imposing RPM may not be profitable. It may not encourage more retail inventories either. RPM may also lower consumer surpluses and social welfare. This study casts some doubt on the demand uncertainty theory that supports RPM.     

The prosumers and the grid

Prosumers are households that are both producers and consumers of electricity. A prosumer has a grid-connected decentralized production unit and makes two types of exchanges with the grid: energy imports when the local production is insufficient to match the local consumption and energy exports when local production exceeds it. There exists two systems to measure the exchanges: a net metering system that uses a single meter to measure the balance between exports and imports and a net purchasing system that uses two meters to measure separately power exports and imports. Both systems are currently used for residential consumption. We build a model to compare the two metering systems. Under net metering, the price of exports paid to prosumers is implicitly set at the price of the electricity that they import. We show that net metering leads to (1) too many prosumers, (2) a decrease in the bills of prosumers, compensated via a higher bill for traditional consumers, and (3) a lack of incentives to synchronize local production and consumption.     

On the redistributive effects of Germany’s feed-in tariff

This article assesses the redistributive effects of a key element of German climate policy, the promotion of renewables in the electricity generation mix through the provision of a feed-in tariff. The tariff shapes the distribution of households’ disposable incomes by charging a levy that is proportional to household electricity consumption and by transferring financial resources to households who are feeding green electricity into the public grid. Our study builds on representative household survey data, providing information on various socio-demographics, household electricity consumption, and ownership of photovoltaic facilities. The redistributive effects of the feed-in tariff are evaluated by means of inequality indices. All the indices indicate that Germany’s feed-in tariff is regressive.     

Dynamic Pricing and the Peak Electricity Load Problem

Reforms to Australia's 45,000 MW electricity market were met with remarkable success, but wholesale market gains have been largely exhausted. Above‐trend growth in investment in energy infrastructure is driving retail prices to levels that triggered the sectoral assault in the first place. This pressure should initiate the last piece of the reform puzzle—removing price regulation, installing smart meters and implementing dynamic pricing to halt the primary cause of the problem, rapidly rising peak demand. We find that such a change can lead to non‐trivial reductions in household peak demand, with our sample load factor improving by 9 percentage points.     

Response of industrial customers to hourly pricing in Ontario’s deregulated electricity market

This paper uses hourly data from Ontario (Canada) between 2005 and 2008 to estimate the effects of real time wholesale electricity prices on demand by industrial customers. Nonlinear SUR estimates from Generalized Leontief (GL) specifications reveal elasticities of substitution from 0.02 to 0.07, confirming that industrial customers (connected to the transmission grid) shift consumption across peak and off-peak periods in order to reap benefits of lower prices. Estimates from FGLS and IV models suggest that this reduction in demand by industrial customers results in lower wholesale prices, which benefits all consumers. The policy lesson is that market based schemes that encourage Real Time Pricing (RTP) pricing should result in positive spillovers to all consumers.     

Intraday hedging with financial options: the case of electricity

As market intermediaries, electricity suppliers purchase electricity from the wholesale market or self-generate to deliver their customers. However, electricity suppliers are uncertain about how much electricity their residential customers will use at any hour of the day until they actually turn switches on. While demand uncertainty is a common feature of all commodity markets, suppliers generally rely on storage to manage it. Singularly, electricity suppliers are exposed to joint volumetric and price risk on an hourly basis given the physical attributes of electricity. In the literature on electricity markets, few articles compare the efficiency of forward contracts, options and physical assets (i.e. power plants) within intraday hourly hedging portfolios, whereas electricity markets are precisely hourly markets. We analyse portfolios made of forwards, options and/or power plants for specific hourly clusters (9 am, 12 pm, 18 pm, 9 pm) based on electricity market data from 2013 to 2015 from the integrated German–Austrian spot market. Through a VaR model, we prove that intraday hedging with forwards is structurally inefficient compared to financial options and physical assets, no matter the cluster hour. Moreover, our results demonstrate the contribution of ‘out of the money’ options for all hours within volatile spot markets.