Why Has California's Residential Electricity Consumption Been So Flat since the 1980s?: A Microeconometric Approach
We use detailed microeconomic data to investigate why aggregate residential electricity consumption in California has been flat since 1980. Using unique micro data, we document the role that household demographics and ideology play in determining electricity demand. We show that building codes have been effective for homes built after 1983. We find that houses built in the 1970s and early 1980s were energy inefficient relative to houses built before 1960 because the price of electricity at the time of construction was low. Employing our regression estimates, we construct an aggregate residential electricity consumption time series index from 1980 to 2006. We show that certain micro determinants of household electricity consumption such as the phase in of building codes explain California's flat consumption while other factors (such as rising incomes and increased new home sizes) go in the opposite direction. Because homes are long-lived durables, we have not yet seen the full impact of building codes on California's electricity consumption.
Matthew Turner and Chris Knittel provided valuable comments on an early draft of this paper. We thank Tom Gorin and Erin Mansur for sharing data with us. Conference participants at the December 2009 UC Berkeley Green Buildings Conference provided useful comments. We thank the Richard Ziman Real Estate Center at UCLA for generous research funding and NIH Grant R01 AG19637. Costa also gratefully acknowledges the support of NIH Grant P01 AG10120. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.