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Utility rate structure modeling and electricity demand elasticity estimation

Bates White econometricians modeled a utility’s inverted block rate structure and estimated electricity demand elasticities for various levels of customer income and electric end-use appliance holdings. Elasticity estimates such as these are essential for estimating the impact of dynamic pricing programs or conducting cost-benefit analyses of price-based energy efficiency programs. However, most publicly available elasticity estimates are from an era in which appliances, demand response technologies, and electricity prices differed greatly from those we see today. The results of the analysis were introduced in testimony by an affiliated expert studying the impact of proposed changes in the utility’s rate structure on low-income customers.

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