Energy Tariffs: Increasing block pricing, household group segmentation and distributional characteristics

Julian Puig and Fernando Navajas

No 4755, Asociación Argentina de Economía Política: Working Papers from Asociación Argentina de Economía Política

Abstract: The paper models the implementation of increasing block pricing (IBP) coupled with household group segmentation by incomes (high, middle and low) and find necessary conditions for use of progressive block prices and fixed charges based on the distributional characteristics of blocks. It evaluates the recent combination of IBP and group segmentation in residential electricity and natural gas in Argentina using current rate schedules for the Metropolitan Area of Buenos Aires and microdata from the latest Household Expenditure Survey. The findings indicate that those conditions are not validated by the data and estimates and do not justify IBP of fixed charges and marginal prices across blocks within a given household group. Additionally, inconsistencies are observed across groups, with the rate structure (fixed charges for both electricity and natural gas, and block prices for electricity) of the middle-income group being unduly close to that of the low-income group. The analysis provides some justification for the discrimination in natural gas (distribution) prices between Buenos Aires City and Greater Buenos Aires within a given group, due to income disparities between households in both areas. The study suggests a direction of reform towards smaller dispersion of energy prices across groups so as to reduce subsidies and advocate for a shift from IBP to a Two-Part Tariff, incorporating lump sum redistribution across groups.

JEL-codes: D31 H23 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2024-11
New Economics Papers: this item is included in nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://aaep.org.ar/works/works2024/4755.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aep:anales:4755

Access Statistics for this paper

More papers in Asociación Argentina de Economía Política: Working Papers from Asociación Argentina de Economía Política Contact information at EDIRC.
Bibliographic data for series maintained by Juan Manuel Quintero ().