Statistical Methods in Finance 2025

Distributional Impacts of Short-Term Electricity Supply Shocks

By:Arundhati Tillu
Wells Fargo, Bangalore

The paper answers the following research questions: Do electric utilities cut power to certain types of consumers in the event of a short-term gap in demand and supply? What is the magnitude of electric power lost? The results indicate urban consumers in 2009 in Maharashtra bear loss in power supply in the event of a short-term gap in demand and supply. Agricultural and rural non-agricultural consumers do not face statistically significant changes in their electric supply. The main takeaway is that in the event of unexpected shortfalls, the electric distribution utility deviates from pre-committed mandated protocols for rationing outages, loadshedding protocols. A contribution demonstrated in the work is the construction of large, high-frequency, previously unusable administrative datasets and the exploitation of exogenous shocks to identify causal relationships in complex, equilibrium-driven systems. These features parallel central challenges in quantitative finance and climate finance, where prices, quantities, and risk are jointly determined and standard correlations may be difficult to interpret causally. Data challenges are also a significant hurdle in climate finance as key climate, policy, and firm data are sparse, leaving crucial long-horizon questions underpowered.