Major Reforms in Electricity Pricing: Evidence from a Quasi-Experiment
Xavier Labandeira (),
Jose Labeaga and
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Xavier Labandeira: Rede, Universidade de Vigo and Economics for Energy
No 201828, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics
The global energy mix is being redefined, and with it the power industry’s cost structure. In many countries, electricity-pricing systems are being revamped so as to guarantee fixed-cost recovery, often by raising the fixed charge of two-part tariff (TPT) schemes. However, consumer misperception of TPTs threatens to undermine the policy’s outcome and puts the sector’s much-needed transformation in jeopardy. We conduct a quasi-experiment with data from a major electricity price reform recently implemented in Spain and find robust evidence that consumers are failing to distinguish between fixed and marginal costs. As a result, the policy goal of cost recovery is not being achieved.
Keywords: Fixed-cost recovery; Residential electricity demand; Renewables; quasi-experiment; two-part tariff. JEL classification:C99; D12; L11; L94; L98; Q41; Q48 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-reg
Date: 2018-12, Revised 2018-12
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Persistent link: https://EconPapers.repec.org/RePEc:ira:wpaper:201828
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