Energy Sector Overview of Dominican Republic: A Prospective Analysis of Price Elasticity of Demand

For the development of countries economy, great investment decisions must be made every year about what shall be done, what shall be invested, what shall be prepared for future. No sector of the world economy or industry feels this more profoundly than energy.(1) The study is firstly conduced to have an overview of the Electricity Sector of Dominican Republic, and describe important issues on the current sector reform, that still in process among Latin American countries. Secondly, the paper aims to determine the elasticity of demand on energy generation sector, through the log linear regression method on variation of price and quantity of demand. Related researches concerning Elasticity of demand in other countries, as Australia, Israel and United States, shows close similarity of our result, where the elasticity tends to be inelastic (0.57) but not perfectly inelastic to variation on price. Although the complexity of the Energy market structures by sectors, Customers ' response to pricing signals can promote efficient investment (in the long run term), help mitigate short-run market power by generators and transmission owners, reduce price spikes, lower price volatility and reduce customers ' bills.