Determinants of per commercial and industrial customer electricity consumption in the United States for the period 2001 to 2005

Abstract

This empirical study focuses on identifying the key economic factors and other conditions that have influenced the per customer commercial and industrial consumption of electricity in the United States during recent years. Unlike most previous studies, this study uses a 5-year state-level panel data set for the period 2001 to 2005. The Panel Least Squares (PLS) estimation provided in this study implies that per commercial and industrial customer electricity consumption is an increasing function of the annual number of Cooling Degree Days (CDDs), per capita real disposable income (a de facto ‘control’ variable) and the peak summer electricity-generating capacity. Furthermore, per commercial and industrial customer electricity consumption is a decreasing function of the average real unit price of electricity to commercial and industrial enterprises and the degree of each state's commitment to energy efficiency programmes, as reflected in an ‘LEEP’ score, where the term ‘LEEP’ stands for Level of Energy Efficiency Programmes. The latter result provides evidence that public policies to promote energy efficiency have yielded at least some benefits in terms of reducing commercial and industrial electricity consumption.

Keywords:

• electricity consumption
• pricing
• cooling degree days
• environmental policy

JEL Classification:

• Q40
• Q48
• Q58