Journal
ENERGY POLICY
Volume 60, Issue -, Pages 741-752Publisher
ELSEVIER SCI LTD
DOI: 10.1016/j.enpol.2013.05.023
Keywords
Block tariffs; Residential electricity; Price elasticity of power demand
Funding
- National Social Science Foundation of China [12ZD059]
- Ministry of Education Foundation of China [10GBJ013, 13YJC790123, 12JJD790027]
- National Natural Science Foundation of China [71203186, 71073131, 71203187]
- Fundamental Research Funds for the Central Universities [2010221051, 201122G008]
- Social Science School of Xiamen [[2013]29]
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The Chinese households that make up approximately a quarter of world households are facing a residential power tariff reform in which a rising block tariff structure will be implemented, and this tariff mechanism is widely used around the world. The basic principle of the structure is to assign a higher price for higher income consumers with low price elasticity of power demand. To capture the non-linear effects of price and income on elasticities, we set up a translog demand model. The empirical findings indicate that the higher income consumers are less sensitive than those with lower income to price changes. We further put forward three proposals of Chinese residential electricity tariffs. Compared to a flat tariff, the reasonable block tariff structure generates more efficient allocation of cross-subsidies, better incentives for raising the efficiency of electricity usage and reducing emissions from power generation, which also supports the living standards of low income households. (C) 2013 Elsevier Ltd. All rights reserved.
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