Work in Progress
Many electric utilities in the US have replaced flat pricing schedules with increasing block prices (IBPs) in an effort to decrease aggregate energy use without imposing costs on low-income households. IBPs are step functions where the price per kilowatt-hour increases as a household uses more electricity. It is not clear, however, in theory or in practice, whether IBPs decrease aggregate energy use or protect low-income households relative to a revenue-neutral flat rate. I use detailed monthly billing records combined with demographic data for 11,745 California households and price differences over time across utility climate zones to estimate price elasticities of energy demand by income. I find that price elasticities of demand increase with income. I use these elasticities to show that IBPs increase total electricity use relative to a revenue-neutral flat price, therefore failing to achieve their goal of conservation. Last, I find that IBPs decrease electricity bills for low-income households while pushing costs to high-income households.
Does Energy Star Certification Decrease Energy Use in Commercial Buildings?
AERE Summer Conference: Schedule
Heartland Environmental and Resource Economics Workshop at Illinois: Schedule
University of Maryland DC Area Student/Professor Environmental and Energy Economics Workshop: Schedule
Young Economists Symposium (YES): Schedule