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The research develops a two-step econometric model to determine the demand for energy services (space heating, water heating, and appliances/lighting) for 440 Canadian households. By using deterministic frontier analysis to estimate the efficiency of furnaces and water heaters, the authors find that low-income households are significantly more responsive to price and income changes than higher-income households. The study confirms a 'rebound effect' where increased efficiency leads to higher energy service demand. These findings are used to argue for targeted subsidies, such as funding for efficient furnaces, to help low-income groups cope with energy price increases driven by climate change policies. The authors also discuss the potential application of this methodology to the Indian energy sector.