Price Elasticity, Block Pricing, and Saving Behaviour of Residential Electricity Consumers in Pakistan: Investigation Based on Household-Level Primary Data


  • Sania Malik Department of Economics, University of Lahore, Sargodha Campus, Sargodha, Pakistan


Residential electricity consumption, Increasing electricity blocks pricing, Price elasticity, Household-level primary data


The purpose of this paper is to explore the efficacy of increasing block electricity pricing (IBEP) which was imposed in 2013 by Pakistani government. The main objective of this policy is rational resource allocation and to lower the cross subsidization to residential sector by two other major sectors such as commerce and industry. The study is based on primary data which is collected through questionnaires from four tehsils of district Sargodha in rural as well as urban region. About 54.6% households understand the electricity price scheme (IBEP) in urban users are more aware as compare to rural but urban electricity consumption is higher due to high use of home appliances. By using regression model the elasticity of residential electricity consumption is estimated for heterogeneous consumers. The upper blocks of electricity consumption are more sensitive to price increases except in fifth block which indicates that higher income group pays more attention to standard of living. The increase in number of trees also affects price elasticity of residential electricity use and positively influence saving behavior. The policy which was implemented with welfare point of view has achieved its target to certain extent. Future guidelines for the upgradation of electricity pricing reform in residential sector are thus proposed.


Download data is not yet available.


Athukorala, P.P.A., Wilson, C., 2010. Estimating short and long-term residential demand for electricity: new evidence from Sri Lanka. Energy Econ. 32: S34–40.

Brown, S.J., David, S.S. 1986. The Theory of Public Utility Pricing. Cambridge University Press.

Bushnell, J.B., Mansur, E.T., 2005. Consumption under noisy price signals: a study of electricity retail rate deregulation in san diego. J. Ind. Econ. 53 (4), 493–513.

Chindarkar, N., Goyal, N., 2019. One price doesn't fit all: An examination of heterogeneity in price elasticity of residential electricity in India. Energy Economics. 81, 765-78.

Daioglou, V., Van Ruijven, B. J., Van Vuuren, D. P., 2012. Model projections for household energy use in developing countries. Energy. 37(1), 601-15.

Druckman, A., Jackson, T., 2008. Household energy consumption in the UK: a highly geographically and social-economically disaggregated model. Energy Policy. 36(8), 3177-92.

Du, G., Lin, W., Sun, C.W., Zhang, D.Z., 2015. Residential electricity consumption after the reform of tiered pricing for household electricity in china. Appl. Energy 157, 276–283.

Electricity information 2017 overview, IEA. Available: publications/freepublications/publication/ElectricityInformation2017Overview. Pdf [accessed Mar.12, 2018].

Feng, Z-H., Zou, L-L., Wei, Y-M., 2011. The impact of household consumption on energy use and CO2 emissions in China. Energy. 36(1), 656-70.

General tariff on electricity supply, FESCO. 2019-20.

Government of Pakistan, Finance Division (2018-19).

He, Y.X., Yang, L.F., He, H.Y., Luo, T., Wang, Y.J., 2011. Electricity demand price elasticity in China based on computable general equilibrium model analysis. Energy. 36(2),1115–23.

Herriges, J.A., King, K.K., 1994. Residential demand for electricity under inverted block rates: evidence from a controlled experiment. J. Bus. Econ. Stat. 12 (4), 419–430.

Huang, W.H., 2015. The determinants of household electricity consumption in Taiwan: Evidence from quantile regression. Energy 87, 120–133

Hung, M.F., Chie, B.T., 2017. The long-run performance of increasing-block pricing in Taiwan’s residential electricity sector. Energy Policy 109, 782–793.

IEA (2018), Energy Efficiency 2018, IEA, Paris

Khanna, N.Z., Guo, J., Zheng, X., 2016. Effects of demand side management on Chinese household electricity consumption: empirical findings from Chinese household survey. Energy Policy 95, 113–125.

Kim, H., 2019. Estimating demand response in an extreme block pricing environment: Evidence from Korea's electricity pricing system, 2005–2014. Energy Policy. 132, 1076-86.

Krishnamurthy, C. K. B., Kriström, B., 2015. A cross-country analysis of residential electricity demand in 11 OECD-countries. Resource Energy Econ. 39, 68–88.

Kristina, E., Söderholm, P., 2010. The devil is in the details: household electricity saving behavior and the role of information. Energy Policy. 38, 1578–87.

Lamiaa Abdallah, Tarek El-Shennawy, "Reducing Carbon Dioxide Emissions from Electricity Sector Using Smart Electric Grid Applications", Journal of Engineering, vol. 2013, Article ID 845051, 8 pages, 2013.

Li, C., Song, Y., Kaza, N,. 2017. Urban form and household electricity consumption: A multilevel study. Energy and Building. S0378-7788(17)32143-6.

Maddock, R., Castaño, E., 1991. The welfare impact of rising block pricing: electricity in colombia. Energy J. 12 (4), 65–78.

Meran, G., Von Hirschhausen, C., 2009. Increasing block tariffs in the water sector: a semi-welfarist approach. SSRN Electron. J. (902).

Miller, W., & Senadeera, M. (2017). Social transition from energy consumers to prosumers: Rethinking the purpose and functionality of eco-feedback technologies. Sustainable Cities and Society, 35, 615-625.

Morris, P., Buys, L., & Vine, D. (2014). Moving from Outsider to Insider: Peer Status and Partnerships between Electricity Utilities and Residential Consumers. PLOS ONE, 9(6), e101189.

Nelson J.P., Roberts M.J., Tromp E.P. (1987) An Analysis of Ramsey Pricing in Electric Utilities. In: Crew M.A. (eds) Regulating Utilities in an Era of Deregulation. Palgrave Macmillan, London.

Pielow, A., Sioshansi, R., Roberts, M.C., 2012. Modeling short-run electricity demand with long-term growth rates and consumer price elasticity in commercial and industrial sectors. Energy. 46(1), 533–40.

Reiss, P.C., White, M.W., 2008. What changes energy consumption? Prices and public pressures. Rand J. Econ. 39 (3), 636–663.

Stokke, A.V., Doorman, G.L., Ericson, T., 2010. An analysis of a demand charge electricity grid tariff in the residential sector. Energy Effic. 3 (3), 267–282.

Sun, C.W., 2015. An empirical case study about the reform of tiered pricing for household electricity in china. Appl. Energy. 160, 383–389.

Sun, L., Zhou, K., Yang S., 2017. Regional difference of household electricity consumption: An empirical study of Jiangsu, China. Journal of Cleaner Production. S0959-6526(17)32423-X.

Wang, T.M., 2011. Rational classification of step tariff –based on Liaoning Province. Price.: Theory Pract. (11), 21–22.

Wang, Z.H., Zhang, B., Yin, J.H., Zhang, Y.X., 2010. Determinants and policy implications for household electricity-saving behaviour: evidence from beijing, China. Energy Policy 39(6), 3550–3557.

Wang, Z.H., Zhang, B., Zhang, Y.X., 2012. Determinants of public acceptance of tiered electricity price reform in china: evidence from four urban cities. Appl. Energy. 91 (1), 235–244.

Ye, B., Ge, F., Rong, X., Li, L., 2016. The influence of nonlinear pricing policy on residential electricity demand — a case study of Anhui residents. Energy Strategy Rev. 13–14, 115–124.



How to Cite

Malik, S. (2021) “Price Elasticity, Block Pricing, and Saving Behaviour of Residential Electricity Consumers in Pakistan: Investigation Based on Household-Level Primary Data”, Journal of Economic Impact, 3(2). Available at: (Accessed: 26July2021).
Bookmark and Share