This methodology is based on the premise that the electricity used in manufacturing is equal to the manufacturing output (in terms of dollar value added, $VA) times the amount of electricity per unit of manufacturing output (in terms of electrical energy intensiveness, i.e., electricity required per $VA) times a price adjustment factor, which permits analysis of the effect of future changes in the relative prices of electricity and gas. The methodology is applied to each of 20 discrete industries in California identified by the Standard Industrial Classification system. The energy intensiveness values are determined by projection of past trends for each of the 20 industries. The results indicate that current pricing policies encourage the substitution of electrical energy for other forms, including human labor, and that increases in the price of electricity in California relative to gas and electricity prices in other states would have little immediate effect on the composition of industry in California. (See also R-995, R-1106, R-1107.)
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