Topic, Thesis Statement, Data

Topic: Is there a relationship between temperature and electricity prices in Philadelphia, PA?

Thesis Statement: There is a relationship between temperature and electricity prices. When temperatures are very low, prices will be higher because people will be more inclined to use heating in their homes. When temperatures are very high, prices will be higher because people are more likely to turn on their air conditioners.

Data Sets: Temperature data from a specific time period will be from the Franklin Institute in Philadelphia: This site provides historical weather data for Philadelphia. Electricity pricing data will be from PJM, which is a Regional Transmission Organization that serves Philadelphia and many other areas:

I chose this topic because the energy industry interests me. Also, I have always had an interest in meteorology. The opportunity to search for a relationship between energy and weather (temperature, specifically) is exciting. I took an energy economics class sophomore year, and I look forward to doing further research on the topic throughout this semester.

This topic is important because it is not only a study on electricity prices and temperature, but it is also a study on human behavior. Will more people demand electricity at times when temperatures are extreme (either very high or very low)? I anticipate that they will. However, those who wish to save money on electricity have the opportunity to do so. By changing daily routines and perhaps doing laundry or using other appliances at nighttime (or on days when the weather is moderate), people may save some money. This idea relates to demand response electricity pricing, in which prices vary during peak and off-peak demand periods. This topic is practical because smart grid technology is growing very rapidly today.

Other weather aspects could have effects on electricity pricing as well. For example, if it is snowing, people might believe that it is colder outside than it actually is. This compels them to turn on their heaters, increasing demand for electricity, and driving up prices. Similarly, I think people would be more inclined to use their air conditioning on a sunny summer day as opposed to a cloudy summer day. As with any other economic research, human behavior and decision making is likely to play a major role.


One thought on “Topic, Thesis Statement, Data

  1. George, I think this is a good project. I would like you to think a little about how consumers see electricity prices and particularly when they see them in relationship to their consumption. There’s a quite a large literature examining how people make decisions about energy use, so you’ll want to make sure to account for things like, delays in billing, type of home, etc. It should be interesting! –EKF

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