A statistical analysis on price elasticity of electricity demand using response surface methodology

Abstract

For strategic planning under restructured environments, it is essential to assess how consumers respond to the price changes in order to increase the profits of supliers and customers. In this study, a case study based on Iran power system was collected to explore the effect of different factors including proportion of income spent-level (A), consumer academic-level (B), demand-types (C), demand time (D), possibility of postponing demand-level (E), price-level (F), demand-level (G) and awareness of participation benefits-level (H) on price elasticity of electricity demand. To achieve this, an nonlinear-empirical model based on Response Surface Methodology (RSM) is created. The statistical analysis reveals that factor A which represents proportion of income spent-level has the most significant effect on determination of the price elasticity of electricity demand while consumer academic-level (B) factor has the least effect. The results can be utilized as a tool for policy makers in developing an effective electricity pricing schemes.