VARIABLES CONSIDERED FOR ANALYSIS

88 P. Tiwari

4. VARIABLES CONSIDERED FOR ANALYSIS

The various variables considered for analysis of residential elec- tricity demand in Bombay are as follows. Household Electricity Expenditure Elect The household monthly electricity expenditure as reported by the households is taken as dependent variable. Because the weather condition in Bombay is the same throughout the year, the weather or season does not affect the electricity expenditure. Although there is some cooling load in summer and postmonsoon period, it has been ignored. Structure Type There are four dummies that have been used for the structure type. These are dummies of a one-zero type for hut, chawl, flat with less than five floors, flat with more than five floors, and bungalows. These variables are introduced to capture the effects of design, materials, construction techniques, etc., on residential electricity consumption. Age of the House This variable is a proxy for a low energy-efficiency thermal enve- lope associated with old houses. It is likely that this variable is also capturing effects related to improvements in design, materials, construction techniques, and appliance efficiency in addition to higher insulation values Berg and Taylor, 1994. Rooms This is a house structure variable. The more the number of rooms the more is the requirement of electric fixtures. Demographic Variables These include discrete variables for the age of reference person, household size, and dummies for the region to which the reference person belongs. As the household size increases, the electricity consumption also increases. The region dummies capture the so- cial characteristics and habits of the person, which differ with the region to which he belongs. The cultural differences introduce differences in demand for electricity as well. The dummies that RESIDENTIAL ELECTRICITY CONSUMPTION IN BOMBAY 89 have been included are of one-zero type for maharashtrians, gujra- tis, and south Indians. APINDX The electricity consumption of the household depends on the appliance holding of the household. A methodology to construct the appliance index APINDX is discussed in Appendix 1. Income Y The income of households is the single most important determi- nant of residential electricity consumption. This variable captures, besides a number of behavioural effects related to variations in income, the number and size of appliances that a household pos- sess. The annual income of the household is considered for the analysis. Price per Unit of Electricity P The price of electricity that has been used in the present estima- tion is the average price for the household. The use of an average price as a determinant of electricity is based on the assumption that the consumer responds to the price that he perceives from his total electricity bill Wilder and Willenborg; Shin, 1985; Branch, 1993.

5. EMPIRICAL MODEL