Industrial Generation of Electricity in 1985: A Regional Forecast

While several studies have estimated the industrial demand for electricity, this paper explicitly estimates the relationship between the industrial self-generation of electricity and electricity prices, an area of analysis which to our knowledge has not been explicitly modelled. The result is a possibly sharper analysis of the industrial demand for electricity, given the choice to self-generate, and perhaps more accurate forecasts of energy demand. Further, this study recognizes the regional differences that characterize energy systems, including utility electric systems. We use this regional model to forecast industrial generation of electricity in 1985 under the Department of Energy Reference Scenario and under an electricity rate reform scenario which would implement marginal cost prices for electricity.