- Friday 25 October 2019
- Dr Xintong Han; Concordia University and CIREQ
This paper particularly tries to provide an exploratory and tentative analysis of how an economic agent chooses the level of monthly total electricity consumption under the existence of a unique pricing system. Using a rich and unique panel data of citizen’s electricity consumption in Hangzhou, China, we structurally model the electricity consumption behaviour under the existence of a mixture of two following pricing systems:
- Increasing Block Pricing (IBP), for which the marginal price will gradually increase with the total consumption level.
- Time-of-Use Pricing system, which refers to the calculation of electricity price in different periods, and the electricity price is higher during peak hours (day) and valley hours (night).
The estimation of such a demand model of electricity consumption allows us to evaluate the impact of counterfactual energy policies. We seek to evaluate how the changes in the blocks and marginal prices, as recently proposed by the government affect the choices and welfare of households, which allows proposing different pricing suggestions for different objective functions.