Price Effects of Energy-Efficient Technologies: A Study of Residential Demand for Heating and Cooling

Energy-efficient appliances reduce the marginal price of the services they deliver. This article shows empirically that such price reductions result in energy savings that are smaller than those engineering techniques generally project. Using econometric techniques with data from a unique utility experiment and a detailed engineering-thermal load model, we find that actual conservation is as much as 13% below engineering estimates for cooling and 8-12% below for heating. Customers who conserve electricity are also persistent; their houses are comparatively warmer in summer and cooler in Winter.