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Energy efficiency programs in the context of increasing block tariffs: The case of residential electricity in Mexico

Pedro Hancevic and Javier Alejandro Lopez-Aguilar

Energy Policy, 2019, vol. 131, issue C, 320-331

Abstract: Increasing block pricing schemes represent difficulties for applied researchers who try to recover demand parameters, in particular, price and income elasticities. The Mexican residential electricity tariff structure is amongst the most intricate around the globe. In this paper, we estimate the residential electricity demand and use the corresponding structural parameter estimates to simulate an energy efficiency improvement scenario, as suggested by the Energy Transition Law of December 2015. The simulated program consists of a massive replacement of electric appliances (air conditioners, fans, refrigerators, washing machines, and lights) for more energy-efficient units. The main empirical findings are the following: in the main counterfactual scenario, the overall residential electricity consumption decreases 9.9% and the associated expenditure falls 11.3%. Additionally, the electricity subsidy decreases 7.5 billion of Mexican Pesos per year (i.e., 403 million of USD at the average exchange rate registered in 2017) and there is an annual cut in CO2 emissions of 3.9 million of tons.

Keywords: Increasing block pricing; Energy efficiency; Residential electricity users; Electric appliances; Energy subsidies; Air pollution (search for similar items in EconPapers)
JEL-codes: D12 L50 L94 Q40 Q53 (search for similar items in EconPapers)
Date: 2019
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Working Paper: Energy efficiency programs in the context of increasing block tariffs: The case of residential electricity in Mexico (2018) Downloads
Working Paper: Energy efficiency programs in the context of increasing block tariffs: The case of residential electricity in Mexico (2017) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:131:y:2019:i:c:p:320-331

DOI: 10.1016/j.enpol.2019.04.015

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