Residential Electricity Use Demand Estimation in Khuzestan Province

In contrast with other source of energy, electricity besides having
great importance in production and consumption, plays an important
role in economic & social decision – making process. During last
years, the variations procedure of residential electricity use has an
increasing scale. Through ١٩٧٧ to ٢٠٠١, total residential use of
electricity in Khuzestan province had increased tenfold and annual
use of every subscriber increases threefold.
The article tends to estimate residential electricity use demand
based on studies from ١٩٥١ to ٢٠٠٢ in iran and those in other
countries through ١٩٧٨ to ٢٠٠٠.
Both long and short run equations are estimated by (OLS)
(ordinary least squares) method and ECM (error correction model)
method in turn. Time series, considered in this article, are between
١٩٨٨ and ٢٠٠١. In this study, Time series are stationary, moreover
estimated models consist with classical hypothesis.
Regression of the model shows that long-run price elasticity is -
٠.٩٧ and long-run income elasticity is ١.٢٢, in short – run, they are -
٠.٢٢ and ٠.٥٤. Gas as a substitution for electricity has negative
coefficient in the model, therefore, the less the price of gas, the more
the electricity use and then, both gas & electricity will be used
simultaneously.
One of the reasons may be rising of temperature in buildings
because of using gas for cooking, boiling water or using lamps (which
produce heat), and thereafter, using air – conditioning and cooling
appliances to lower the temperature in hot months of year (about ٧
months). These are the most using electricity appliances.
Comparing income and price elasticities of residential electricity
demand in Khuzestan province, it can be concluded that electricity
demand is affected by price and income policies Income policies have
more influence than price policies.