Assessment of the Economic Benefits from Electricity Consumption

Abstract - As electricity is an indispensable input to human’s existence and industrial production, economic benefits arise from consumption. The economic benefits of the e lectricity consumption are useful information in various fields of electricity-related policy. Therefore, thi s study attempts to value the economic benefits from electricity use. The economic benefit of electricity consu med is the area under the demand curve which made of the sum of the actual consumer expenditure and the consumer surplus. Consumer expenditure can be easily observed but the information on price elasticity of dema nd is necessarily required to compute consumer surplus. This study derives the estimates for price elasticitie s through literature review. The price elasticities of the electricity demand for residence, industry, and commerci al are estimated to be -0.332, -0.351, and -0.263, respectively. Because the consumer surplus of the elect ricity consumption for residence, industry, and commercial are computed to be 191.54, 143.44, and 231.91 wo n per kWh, respectively. Given that average prices of electricity use were 127.02, 100.70, and 121. 98 won per kWh for the year 2013, the economic benefit are calculated to be 318.56, 244.14, and 353.8 9 won per kWh, respectively. We can convert the values to 321.96, 246.75, and 357.67 won per kWh in 2014 co nstant price, respectively, using consumer price index. They can be used in the economic feasibility analy sis of a new electricity supply project.