Electricity demand and price

will be generally agreed that demand is just as important a factor as supply in the price-fixing of electricity. The consumer, like the producer, is a free agent, and just as the latter cannot be forced to sell at a loss so the former cannot be compelled to buy at a loss, i.e. to take more than it pays him to do. It is true that the price is actually fixed by the producer, but the consumer has the ultimate veto; and the amount he takes will be governed by the price just as certainly as that price is governed by the cost of production. That being so, it would be expected that all tariff discussions would envisage demand and utility just as much as they do supply and costs. A glance at any engineering index will dispel this idea, and will show at least a hundred entries under the heading of " Costs " for every one under the heading " Demand." Moreover, whilst the term " elasticity of demand " has been employed in tariff discussions, no precise definition appears to have been attempted, still less any appraisal of its value and consequence in electricity supply. The present paper is devoted almost entirely to the demand aspect and to the effect it has, or should have, upon tariff construction. Part I is a statement of the theory of supply and demand and the price reaction as generally accepted by economists, but interpreted with reference to, and illustrated by, electricity supply. The case of free competition is first dealt with, and then the case of monopoly. Elasticity of demand is explained and defined, and its probable values for various electrical loads are then surmised. This part of the work should not require to be done again. Part II is an attempt at quantitative application of the theory. Various electrical demand curves are examined and analysed into their component parts. Several methods are tried of plotting and biasing the figures in order to compensate for other variables. Probable elasticity values are estimated, and their bearing on tariff policy is o- utlined. This part of the paper is a commencement merely, and will be useful rather for its trigger action than for its actual content. The paper concludes with a short appendix dealing with terms and relationships.