Understanding how electricity demand responds to price shocks is a key question for a number of actors along the electricity supply chain as well as policy makers, albeit its estimation presents several challenges. In this paper, we exploit a natural experiment to estimate the short-run impact of a price shock on residential electricity consumption. In particular, in January 2021, the utility company adopted a new tariff schedule whereby the fixed component of the tariff was organized into four tiers based on households’ annual moving average consumption, which we exploit in a regression-discontinuity design. Despite the large average price increases at each fixed-cost cutoff, we find no significant effect of the tariff change on subsequent electricity consumption around the three thresholds. This lack of demand response to prices suggests that non-price instruments may be more effective at influencing residential electricity consumption.
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