Demand forecasting and revenue requirements, with implications for consideration in British Columbia

by Jan Paul Acton

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Canadian utilities have recently been subjected to regulatory review of electric rate structures. This paper was presented to the British Columbia Utilities Commission in a British Columbia Hydro rate case. It reviews 50 studies of electricity demand drawn from U.S., Canadian, and international papers and applied to one or more of residential, commercial, and industrial customers. It provides an assessment of likely ranges of short- and long-run price elasticities of demand by customer class, as well as a discussion of elements of electric rate structures and costs relevant to rate review and load forecasting. Among other things, the author argues that failing to take account of a price elasticity leads to overbuilding and therefore, higher electricity rates than would occur if price elasticities were considered in load forecasts.

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