Panel Cointegration Modeling of Electricity Consumption and Sales Price

Electricity sales price is an important economic lever of power market. The accurate analysis of relationship between the electricity consumption and sales price has become a crucial role on the rational adjustment of sales price. Thus, the analysis method of relationship between the electricity consumption and sales price is proposed based on the panel co-integration in this paper. By using simultaneously the time series and cross-section of data, the co-integration relationship between the electricity consumption and sales price at different time and in different regions is accurately analyzed. With the panel data of electricity consumption and sales price from 1990 to 2005 in United States, the test results of panel unit root and panel co-integration indicate that the electricity consumption and sales price have obvious panel co-integration relationship. Then, the fixed effect model based on cross-section weightings is proposed in order to describe the long-term equilibrium relationship between the electricity consumption and sales price.