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Funding for Universal Service Obligations in Electricity Sector: the case of green power development

Pascal Favard (), François Mirabel and J.-C. Poudou

Cahiers du LASER (LASER Working Papers) from LASER (Laboratoire de Science Economique de Richter), Faculty of Economics, University of Montpellier 1

Abstract: The process of deregulation in network industries, in particular in the electric sector, raises the problem of financing the Universal Service Obligations (USO) corresponding to the production, transport and distribution operations. In this paper, we study three ways of funding for an USO of production, especially the green electricity development: the funding with cross-subsidies, the implementation of a fund (funding by a tax) and finally a voluntary funding system by direct subscriptions of consumers. We notably show that this last one Pareto dominates mostly, from a welfare point of view, the other scenarios.

Keywords: ELECTRICITY; ENVIRONMENT; REGULATION; NETWORK; UNIVERSAL SERVICE (search for similar items in EconPapers)
JEL-codes: D4 L5 L94 Q4 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2002
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