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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.