1. Handling different heating technologies and zero expenditures in estimation of household energy consumption Bente Halvorsen Statistisk sentralbyrå

2. Theoretical and empirical challenges Zero expenditures for individual households (micro data) – Do not own heating equipment allowing for the use of all types of fuels – Equipment is available, but not utilized Peak-load substitution Limited price information – Unknown electricity price at the time of consumption – Different units of measurement – Varying energy efficiency of the equipment

3. What do we want to find? Energy elasticities – Own price, cross price, and budget elasticities  Depending on the chosen heating portfolio  Depending on the utilization of the chosen heating portfolio Effects of: – Correcting for zero expenditures – Correcting for peak-load substitution – Limited price information

4. Correcting the estimations Simultaneous Almost Ideal Demand System (AIDS) Zero expenditures – Double hurdle model  Do not own equipment (discrete)  Own equipment – Zero expenditures (discrete) – Positive expenditures (continuous) »Only relevant prices enter the expenditure function Peak-load substitution – Trivariate, bivariate and univariate normal density functions No prior assumptions about homogeneity and symmetry

5. Mean values by heating portfolio

6. Elasticities in the fully corrected model (1 = electricity, 2 = fuel oil, and 3 = firewood)

7. Effects on elasticities of correcting the estimations (1 = electricity, 2 = fuel oil, and 3 = firewood)

8. Conclusions Household energy consumption depends on heating portfolio Correcting for zero consumption – Significant effects on several coefficients – Effects on several elasticities Correcting for peak-load substitution – No significant effects on coefficients in the expenditure functions – Significant correlation coefficients Limited price information – Rejection of symmetry and homogeneity properties

9. The effect of limited price information