Assessment of the Formation of the Economic Effect of Cross-Subsidization in the Electric Power Industry

Aleksandra Leschinskaya (), Oksana Kirillova and Maksim Palyanov
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Aleksandra Leschinskaya: Department of Finance Sustainable, Plekhanov Russian University of Economics, 117997 Moscow, Russia
Oksana Kirillova: Basic Department of FAS of Russia, Plekhanov Russian University of Economics, 117997 Moscow, Russia
Maksim Palyanov: Basic Department of FAS of Russia, Plekhanov Russian University of Economics, 117997 Moscow, Russia

Energies, 2023, vol. 16, issue 16, 1-13

Abstract: The materials presented in the article reflect changes in the mechanism of cross-subsidization in the electric power industry, where price discrimination of consumers has taken place until recently. Historically, the established practice has been expressed in the redistribution of the burden of paying for electric energy between consumer groups, ensuring the containment of tariff growth. However, the reduction of tariffs for some categories of citizens was achieved by increasing them for others, social justice was violated and, for some buyers, the price is set above marginal costs, and for others—lower, although, in general, it led to prices corresponding to average costs. This policy was considered by the state as a measure of social support for the population but, at the same time, led to some negative consequences. The presented conceptual provisions for the creation of unified energy zones aimed at ensuring a fair redistribution of cross-subsidization between electricity consumers and a gradual reduction in its consumption will make it possible to form a unified energy space of Russia. On a concrete example, the socio-economic effects of the introduction of the author’s approach to the distribution of cross-subsidization between groups of consumers of electric power transmission services are identified and shown. They show the degree of influence of the amount of cross-subsidization paid by the consumer company on the cost of the final products that this company produces. The price of electric energy, which is part of the cost of production, significantly changes the consumer cost of energy-intensive production. The implementation of the proposals contained in the article will create economic incentives for the development of economically lagging regions and will make it possible to form an effective state tariff policy in the process of regulating the socio-economic development of the Russian Federation, defining an effective state tariff policy.

Keywords: electric power industry; cross-subsidization; tariff regulation; social justice; costs; mechanism of state regulation of prices; unified energy zones; prices (tariffs); marginal prices (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2023
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