Reforming Industrial Fuel and Residential Electricity Prices in Saudi Arabia

Walid Matar

Discussion Papers from King Abdullah Petroleum Studies and Research Center

Abstract: The Saudi electricity sector buys fuel and sells electricity at prices administered by the government. In this analysis, we assume that fuel prices are deregulated — priced at their marginal values or international equivalents — and use a long-term static version of the KAPSARC Energy Model (KEM) for Saudi Arabia. This allows a better understanding of the economic effects of energy price reform packages by providing illustrative estimates of their impacts. We do not propose a specific package of reforms, but seek to show the different channels by which the Saudi economy can benefit. We expand on previous KAPSARC analyses by combining the price reform of fuels used in power plants with the implementation of alternative electricity pricing schemes for households. In particular, we examine the differences between ‘lifeline’, average-cost and marginal-cost electricity pricing policies for residential customers.

Keywords: Average Cost Pricing; Carbon Dioxide Emissions; Dynamic Pricing; Economic Modeling; Electricity Tariffs; Energy Demand; Energy Price Reform; Fuel Mix; Fuel Price; Industrial Fuel; KAPSARC Energy Model (KEM); KAPSARC Energy Model For Saudi Arabia (KEM-SA); Lifeline Pricing; Load Demand; Natural Gas; Policy Simulation; Price Elasticities; Residential Electricity (search for similar items in EconPapers)
Pages: 32
Date: 2017-07-29
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