AN INVESTIGATION INTO ELECTRICITY CONSUMPTION: A HOUSEHOLD LEVEL STUDY

Abstract

Electricity is one of the key sources and has a vital role in the economic development of a country large number of industrial units are hosed on electricity and it is the chief source of energy for households. The improvement in technology had increased the demand for electricity many folds and consequently, its shortfall is observed. It is alarming that the shortfall is increasing over time. The present study is based on the empirical analysis of electricity consumption at the household level. The main objective of this study is to explore the household determinants of electricity consumption. In this regard, we analyzed the effect of temperature, hoe size, members, income, region, and price of electricity on its consumption. The study is based on the latest available micro data set of the Household Integrated and Economic Survey (HIES 2013-2014) comprising of 17,989 households. Two models are estimated in this study. In the first model, we used OLS to find out the average effect of different explanatory variables on electricity consumption; the result shows the positive effect of household size, house size, and number of air conditioners and refrigerators on electricity consumption, while it shows the negative effect of the average price of electricity and temperature on electricity consumption. In the second model, we compare the consumption pattern of household electricity among different groups using the Multinomial Logit Model. The result showed that house size, household income, and month dummy have a positive effect on electricity consumption, while household size, average monthly temperature, and heating degree days show a negative impact on electricity consumption. The interesting phenomenon is that the increase in the average price of electricity leads to an increase in the consumption of electricity in higher-income groups relative to low-income groups.