Marginal Energy Prices - RECS97 Update 

The original estimation of residential ni~rginal energy prices at the individual household level (as reported in 

the Marginal Energy Prices Report, http:llwww.eren.doe.govibuildingslcodes~standards/applbrflpdfslmargina1~ 

energygrice.pdf) was based on household energy billing data from EIA's 1993 RECS survey. When the 1997 RECS 

survey data became available, LBNL updated its estimation of residential marginal energy prices at the individual 

household level using that data. In addition, LBNL incorporated several refinements (as described below) to the 

marginal price estimation method it had originally developed. 

Presented below are the: 

RECS97-based results. 

Refinements to LBNL's marginal price estimation method. 

RECS93-based results re-calculated using the refined marginal price estimation method that was applied to the 

RECS97 data. 

EE-RM-STD-98-440 COMMENT 241ZZ

Marginal Energy Prices - RECS97 Update 

The original estimation of residential marginal energy prices at the individual household level (as reported in 

the Marginal Energy Prices Report, http://www.eren.doe.govlbuildings/codes_standards/applbrf/pdfs/marginal_ 

energy~rice.pdf) was based on household energy billing data from EIA's 1993 RECS survey. When the 1997 RECS 

survey data became available, LBNL updated its estimation of residential marginal energy prices at the individual 

household level using that data. In addition, LBNL incorporated several refinements (as described below) to the 

marginal price estimation method it had originally developed. 

Presented below are the: 

RECS97-based results. 

Refinements to LBNL's marginal price estimation method. 

RECS93-based results re-calculated using the refined marginal price estimation method that was applied to the 

RECS97 data. 
Marginal Ener~v Prices - Summary of RECS97 Results 

Table 1. Marginal Residential Electricity Prices - RECS97 

I I I 

Electricity - RECS97 Prices ($/kwh, in 1997$) 

(Weighted Mean) 

% Difference between 

Marginal Price and Average Price 

I Annual I 

Households I Summer I 9.1 I 1 -2.5% / -76.1% to +288.9% 

MARGINAL 

I I I I I 

AVERAGE 

wlAcceptable 

Seasonal Prices 

All Households I 8.7 I 9.4 1 -6.9% 1 

Households wlo Acceptable 

Seasonal Prices 

Table 2. Marginal Residential Natural Gas Prices - RECS97 

I 1 I 

Weighted Mean Range 

I 

9.0 

9.4 

Nm-S~mmer 

Natural Gas - RECS97 

8.5 

9.6 

Note for Tables 1 and 2: For any household, a negative percent difference between marginal price and average price 

indicates that the household's marginal price is smaller than the household's average price. A positive percent 

difference between marginal price and average price indicates that the household's marginal price is larger than the 

household's average price. 

I 

Households 

wlAcceptable 

Seasonal Prices 

All Households 

- 10.0% 

-4.5% 

Prices ($/ccf, in 1997$) 

(Weighted Mean) 

70.1 

63.7 

66.4 

Winter 

Non-Winter 

-72.2% to +73.3% 

-55.3% to +397.5% 

% Difference between 

Marginal Price and Average Price 

MARGINAL 

Households w/o Acceptable 

Seasonal Prices 

66.0 

Weighted Mean 

Annual 

AVERAGE Range 

-96.5% to +179.4% 

-81.6% to +57.9% 

-90.8% to +33.7% 

76.5 

82.4 

78.5 

-4.4% 

-15.3% 

-14.5% 

-12.6% 

EE-RM-STD-98-440 COMMENT 241ZZ

Marginal Energy Prices - Summary of RECS97 Results 

Table 1. Marginal Residential Electricity Prices - RECS97 

Electricity - RECS97 Prices (¢/kWh, in 1997$) % Difference between 

(Weighted Mean) Marginal Price and Average Price 

Annual 

MARGINAL AVERAGE Weighted Mean Range 

Households Summer 9.1 -2.5% -76.1 % to +288.9% 

wi Acceptable 9.4 

Seasonal Prices Non-Summer 8.5 -10.0% -72.2% to +73.3% 

Households wlo Acceptable 

Seasonal Prices 9.0 9.6 -4.5% -55.3% to +397.5% 

All Households 8.7 9.4 -6.9% 

Table 2. Marginal Residential Natural Gas Prices - RECS97 

Natural Gas - RECS97 Prices (¢/ccf, in 1997$) % Difference between 

(Weighted Mean) Marginal Price and Average Price 

Annual 

MARGINAL AVERAGE Weighted Mean Range 

Households Winter 70.1 -4.4% -96.5% to + 179.4% 

wlAcceptable 76.5 

Seasonal Prices Non-Winter 63.7 -15.3% -81.6% to +57.9% 

Households wlo Acceptable 

Seasonal Pri ces 66.4 82.4 -14.5% -90.8% to +33.7% 

All Households 66.0 78.5 -12.6% 

Note for Tables 1 and 2: For any household, a negative percent difference between marginal price and average price 

indicates that the household's marginal price is smaller than the household's average price. A positive percent 

difference between marginal price and average price indicates that the household's marginal price is larger than the 

household's average price. 

2 
Refinements to LBNL's Maryinal Price Estimation Process 

For RECS97, LBNL made several refinements to its marginal price estimation process in the following areas: 

seasonal prices for gas as well as electric 

criterion for accepting regression line slopes 

source of average household prices 

Each of these three refinements is explained below. 

1) Seasonal prices for gas as well as electric: 

For RECS97, natural gas billing data was split into seasons in a manner parallel to electricity data. The "peak" 

winter season was defined as those billing periods whose midpoint fell in any of the following four months: 

November, December, January, February. The remaining eight months constitute the non-winter season. 

For RECS93, natural gas prices were estimated on an annual basis only; that is, seasonal data were not 

examined. 

2) Criterion for accepting regression line slopes: 

For RECS97, the criterion for accepting regression line slopes as marginal prices was established using an i! 

cutoff of 0.90. That is, regression slopes of household billing data were not accepted as household marginal 

prices unless the 2 value was at least 0.90. This criterion was used with both the electricity and natural gas 

billing data. 

For RECS93, the criterion for accepting regression line slopes was based on rejecting extreme values of the 

regression slopes themselves. For electricity, regression line slopes were rejected if they were either less than 

or equal to zero or if they were greater than 22 centslkwh. For natural gas, regression line slopes were 

rejected if they were either less than or equal to zero or if they were greater than $3.20ltherm. 

3) Source of average household prices: 

For RECS97, average prices were calculated for each RECS household using the available billing data for that 

household. Those average prices were then used to calculate the percent difference between marginal price 

and average price for that household. Weighted means of the percent difference between marginal price and 

average price were also calculated for the set of households with acceptable seasonal prices, the set of 

households without acceptable seasonal prices, and for all of the households. 

For RECS93, the average price reported in the RECS database for each RECS household was used; individual 

household average prices were not calculated using the RECS billing data itself. The average price reported 

in the RECS database for each household is the average price for the local utility, not the household's own 

average price. Use of these reported average prices in the calculation of the percent difference between 

marginal price and average price does not yield as accurate a value of the percent difference between marginal 

price and average price as does use of each household's own directly-calculated average price. 

EE-RM-STD-98-440 COMMENT 241ZZ

Refinements to LBNL's Marginal Price Estimation Process 

For RECS97, LBNL made several refinements to its marginal price estimation process in the following areas: 

seasonal prices for gas as well as electric 

criterion for accepting regression line slopes 

source of average household prices 

Each of these three refinements is explained below. 

1) Seasonal prices for gas as well as electric: 

For RECS97, natural gas billing data was split into seasons in a manner parallel to electricity data. The "peak" 

winter season was defined as those billing periods whose midpoint fell in any of the following four months: 

November, December, January, February. The remaining eight months constitute the non-winter season. 

For RECS93, natural gas prices were estimated on an annual basis only; that is, seasonal data were not 

examined. 

2) Criterion for accepting regression line slopes: 

For RECS97, the criterion for accepting regression line slopes as marginal prices was established using an f2 

cutoff of 0.90. That is, regression slopes of household billing data were not accepted as household marginal 

prices unless the f2 value was at least 0.90. This criterion was used with both the electricity and natural gas 

billing data. 

For RECS93, the criterion for accepting regression line slopes was based on rejecting extreme values of the 

regression slopes themselves. For electricity, regression line slopes were rejected if they were either less than 

or equal to zero or if they were greater than 22 cents/kWh. For natural gas, regression line slopes were 

rejected if they were either less than or equal to zero or if they were greater than $3.20/therm. 

3) Source of average household prices: 

For RECS97, average prices were calculated for each RECS household using the available billing data for that 

household. Those average prices were then used to calculate the percent difference between marginal price 

and average price for that household. Weighted means of the percent difference between marginal price and 

average price were also calculated for the set of households with acceptable seasonal prices, the set of 

households without acceptable seasonal prices, and for all of the households. 

For RECS93, the average price reported in the RECS database for each RECS household was used; individual 

household average prices were not calculated using the RECS billing data itself. The average price reported 

in the RECS database for each household is the average price for the local utility, not the household's own 

average price. Use of these reported average prices in the calculation of the percent difference between 

marginal price and average price does not yield as accurate a value of the percent difference between marginal 

price and average price as does use of each household's own directly-calculated average price. 

3 
Marginal Ener~v Prices - Surnrnarv of RECS93 Results. Re-calculated Using LBNL's Refined 

Mar~inal Price Estimation Method 

For comparison purposes, we have re-calculated marginal and average prices and the percent difference between 

marginal price and average price for the RECS93 households using our refined marginal price estimation process. 

I 

Table 3. Marginal Residential Electricity Prices - RECS93 

Electi *:,:AT Dl7PC0'2 lury - 1WLU7J A . . - - - , r, . . -., 

(Weighted Mean) 

Annual 

The factor that converts electricity prices in 1993$ to electricity prices in 1997$ is 1.013. 

Prir~c (d/kWh) % Difference between 

Marginal Price and Average Price 

Table 4. Marginal Residential Natural Gas Prices - RECS93 

I I I I 

Households 

w1Acceptable 

Seasonal Prices 

Summer 

Non-S~mmer 

- - 

The factor that converts natural gas prlces In 1993$ to natural gas pr~ces In 1997$ IS 1.127. 

MARGINAL 

Households w/o Acceptable 

Seasonal Prices 

All Households 

Note for Tables 3 and 4: For any household, a negative percent difference between marginal price and average price 

indicates that the household's marginal price is smaller than the household's average price. A positive percent difference 

between margnal price and average price indicates that the household's marginal price is larger than the household's 

average price. 

1993$ 

9.0 

8.5 

8.7 

8.7 

Natural Gas - RECS93 

1997$ 

9.1 

8.6 

8.8 

8.8 

AVERAGE 

Households 

wlAcceptahle 

Seasonal Prices 

Weighted 

M~~~ 

-2.0% 

-8.6% 

-5.3% 

-6.1 % 

1993$ 

9.2 

9.2 

9.2 

Prices (#/ccf) 

(Weighted Mean) 

Wlnter 

Non-Wlnter 

Range 

-239.4% to +176.7% 

-72.2% to +70.5% 

-76.6% to +136.4% 

1997$ 

9.4 

9.3 

9.4 

% Difference between 

Marglnal Price and Average Price 

Households wlo Acceptable 

Seasonal Prices 

All Households 

Wetghted 

M~~~ 

-1 0.2% - 

MARGINAL 

Range 

-79.7% to +54.2% 

Annual 

AVERAGE 

1993$ 

57.9 

55.1 

57.6 

56.3 

19938 

65.8 

71.4 

66.9 

1997$ 

65.2 

62.1 

64.9 

63.5 

1997$ 

74.1 

80.5 

75.3 

-14.7% 

-14.1% 

-1 3.4% 

--78.9% to +38.0% 

-89.0% to +27.5% 

EE-RM-STD-98-440 COMMENT 241ZZ

Marginal Energy Prices - Summary of RECS93 Results, Re-calculated Using LBNL's Refined 

Marginal Price Estimation Method 

For comparison purposes, we have re-calculated marginal and average prices and the percent difference between 

marginal price and average price for the RECS93 households using our refined marginal price estimation process. 

Table 3. Marginal Residential Electricity Prices - RECS93 

Electricity - RECS93 Prices (¢/kWh) % Difference between 

(Weighted Mean) Marginal Price and Average Price 

Annual 

MARGINAL AVERAGE 

Weighted 

1993$ 1997$ 1993$ 1997$ Mean Range 

Households Summer 9.0 9.1 -2.0% -239.4% to +176.7% 

wi Acceptable 9.2 9.4 

Seasonal Prices Non-Summer 8.5 8.6 -8.6% -72.2% to +70.5% 

Households w/o Acceptable 

Seasonal Prices 8.7 8.8 9.2 9.3 -5.3% -76.6% to + 136.4% 

All Households 8.7 8.8 9.2 9.4 -6.1% 

. . The factor that converts electnclty pnces In 1993$ to electnclty pnces In 1997$ IS 1.013 . 

Table 4 Marginal Residential Natural Gas Prices - RECS93 

Natural Gas - RECS93 Prices (¢/cct) % Difference between 

(Weighted Mean) Marginal Price and Average Price 

Annual 

MARGINAL AVERAGE 

1993$ 1997$ 1993$ 1997$ 

Weighted 

Mean Range 

Households Winter 57.9 65.2 -10.2% -79.7% to +54.2% 

w/Acceptable 65.8 74.1 

Seasonal Prices Non-Winter 55.1 62.1 -14.7% --78.9% to +38.0% 

Households w/o Acceptable 

Seasonal Prices 57.6 64.9 71.4 80.5 -14.1% -89.0% to +27.5% 

All Households 56.3 63.5 66.9 75.3 -13.4% 

The factor that converts natural gas prices in 1993$ to natural gas prices in 1997$ is 1.127. 

Note for Tables 3 and 4: For any household, a negative percent difference between marginal price and average price 

indicates that the household's marginal price is smaller than the household's average price. A positive percent difference 

between marginal price and average price indicates that the household's marginal price is larger than the household's 

average price. 

4