The Impact of Energy Saving Practices: An Estimation of Residential Electricity Consumption in the Philippines

Purpose – Recognizing the rise in household electricity consumption and the share of the residential sector in electricity consumption in the Philippines, this paper develops a household electricity model to analyze household electricity consumption and the factors that significantly affect related behavior among Philippine households, with an emphasis on the impact of energy-saving practices as promoted by the government and industry. Design/Methodology/Approach – The demand for electricity in the Philippines is examined via an Ordinary Least Squares Regression of several functional forms of a residential electricity consumption model, using data from the Household Energy Consumption Surveys of 2004 and 2011. Findings – Results show that electricity consumption is price inelastic and reacts as a normal good to income changes, with income effects stronger at lower incomes. Charcoal was found to be a complement, while fuelwood, kerosene, and liquefied petroleum gas were substitutes to electricity. Results also showed that household size, urbanity, and the capital stock of appliances directly relate to household electricity consumption. Research Implications – From the perspective of energy policy, there seems to be a need to rethink information campaigns relating to energy-saving and reducing practices and alternatives. As the backfire phenomenon (the extreme case of the rebound effect) seems to manifest among the survey households, there seem to be misconceptions regarding the appropriate use and purpose of energy efficient electrical devices, which should be clarified to preclude greater electricity consumption and promote energy savings. If public information and awareness campaigns can be redesigned to prevent the backfire phenomenon, there is a potential to reduce the residential use of electricity.