An Empirical Analysis of Determinants of Commercial and Industrial Electricity Consumption

The present empirical study focuses on identifying key economic factors and other conditions that have influenced the per customer commercial and industrial consumption of electricity in the U.S. during recent years. Unlike most previous studies, this study uses a state-level panel data set for the period 2002 through 2005. The three panel two-stage least squares (P2SLS) estimates provided in this study imply that per customer commercial and industrial electricity consumption is an increasing function of the annual number of cooling degree days, per capita real disposable income (a de facto “control” variable), and the peak summer electricity generating capacity. Furthermore, per customer commercial and industrial electricity consumption is a decreasing function of the average real unit price of electricity to commercial and industrial enterprises.