Residential Electricity Consumption in Las Cruces, New Mexico, USA

Abstract

This study examines how residential electricity consumption (KWHC) reacts to changes in the price of electricity, the price of natural gas, real income per capita, heating degree days, and cooling degree days. Annual frequency data analyzed are for Las Cruces, the second largest metropolitan economy in New Mexico. The sample period is 1977 to 2016. An AutoregressiveDistributed Lag model (ARDL) is employed to obtain long-run and short-run elasticities. In the long-run, residential consumption does not respond in a statistically reliable manner to any of the explanatory variables. All of the coefficient signs are as expected and those for real per capita income and total degree days appear plausible. In the short-run, residential consumption responds reliably to variations in all of the variables except per capita income. Somewhat surprisingly, the short-run results also include an own-price elasticity that is close to zero, implying that residential electricity has a horizontal demand curve in Las Cruces.