Deconstructing the ‘Rosenfeld Curve’: Why is Per Capita Residential Energy Consumption in California so Low?

Over the last three decades, California has implemented a variety of regulatory and legislative measures aimed at reducing the demand for energy, through encouraging more efficient consumption. These programs have attracted widespread interest because state electricity consumption per capita has stayed relatively steady since 1970, in contrast to a national trend of steady growth. In this paper I examine the determinants of residential energy consumption with a view to determining the fraction of the state-nation difference in electricity consumption intensity that might reasonably be attributed to policy. I present an econometric model of household demand for energy and estimate that policy and price effects can explain only about 20 percent of the state nation difference in consumption intensities. Additionally, the model suggests that split incentive considerations may have resulted in inefficiently high energy consumption in rented dwellings and that program interventions may have been particularly effective in reducing the energy needed for heating and cooling end uses.