Tariff flags and electricity consumption response in Brazil

Alexandre Schwinden Garcia, Frederick Fagundes Alves and João Marcello Pimentel Filgueiras

Utilities Policy, 2024, vol. 88, issue C

Abstract: We evaluated the effectiveness of the tariff flags system (TFS) on electricity consumption in Brazil. Tariff flags represent a demand-side management (DSM) mechanism used in the Brazilian electricity sector and act as a signal sent to agents about electricity production costs. The effectiveness of the flags in reducing electricity consumption is assessed using monthly consumption data from 26 Brazilian states between 2015 and 2022, and panel data models with fixed effects were estimated. The results indicate that only the water scarcity flag effectively reduced electricity consumption by 2.89%. When the Yellow, Red I, and Red II flags were in operation, there was a median increase in electricity consumption of 0.61%, 4.24%, and 1.47%, respectively. In addition, the other variables indicate that the higher the temperature and income of the States, the higher the consumption, and the higher the electricity tariff, the lower the consumption. We also observed persistence in the consumption of electricity in the States, possibly related to consumer habits.

Keywords: Tariff flags; Electricity; Brazil (search for similar items in EconPapers)
JEL-codes: D04 L94 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juipol:v:88:y:2024:i:c:s0957178724000444

DOI: 10.1016/j.jup.2024.101751

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