Abstract
Accurate forecasts of energy demand are required for public policy formation, but estimation of the residential demand for electricity presents a number of conceptual and statistical problems. This paper focuses on two interrelated issues in electricity demand analysis: model specification with respect to the price variable and the level of data aggregation. From an empirical study of demand in New England, our principal conclusions are: (a) price elasticities, estimated using state level data, differ from those at the utility level; (b) at the state level of aggregation, alternative model specifications of demand give markedly different results; (c) there appears to be significant differences between the New England states in the demand for electricity; and (d) it was not possible to discern whether consumers respond to average price or marginal price.
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