The Cost of Residential Outages in Chile: An Estimate Using the Demand Curve

Authors

  • José Miguel Benavente Universidad de Chile image/svg+xml
  • Alexander Galetovic Universidad de los Andes
  • Ricardo Sanhueza Universidad de los Andes
  • Pablo Serra Centro de Economía Aplicada, Departamento de Ingeniería Industrial, Universidad de Chile. image/svg+xml

Keywords:

outage cost, energy rationing, demand curve, elasticity, Chile

Abstract

This paper estimates the residential outage cost in Chile’s Central Interconnected System (SIC), using consumer’s willingness to pay for energy. We first estimate the cost of reducing energy consumption efficiently, that is only the less valuable kWh (as indicated by the market demand curve) are rationed. Then we estimate the per-kWh cost of rationing by cutting off service. We find that the outage cost varies considerably depending on the length of the rationing period; and on how energy is rationed. Longer restrictions allow users to adjust more, and hence are cheaper. Similarly, we estimate that rationing efficiently is between two and six times cheaper than rationing by cutting off service.

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References

Benavente, J. M., Galetovic, A., Sanhueza, R., & Serra, P. (2005). Estimando la deman- da residencial por electricidad en Chile: El consumo es sensible al precio. Cuadernos de.

Fierro, G., & Serra, P. (1993). Un modelo de estimación del costo de falla: El caso de Chile. Cuadernos de Economía, 30(90), 247–259.

Sanghvi, A. P. (1983). Optimal electricity supply reliability using customer shortage costs. Energy Economics, 5(2), 129–136. https://doi.org/10.1016/0140-9883(83)90020-8

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Published

2005-10-31

How to Cite

Benavente, J. M., Galetovic, A., Sanhueza, R., & Serra, P. (2005). The Cost of Residential Outages in Chile: An Estimate Using the Demand Curve. Economic Analysis Review, 20(2), 23–40. Retrieved from https://www.rae-ear.org/index.php/rae/article/view/49

Issue

Vol. 20 No. 2 (2005)

Section

Articles

License

Copyright (c) 2005 José Miguel Benavente, Alexander Galetovic, Ricardo Sanhueza, Pablo Serra

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

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