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- Title
Major Reforms in Electricity Pricing: Evidence from a Quasi-Experiment.
- Authors
Labandeira, Xavier; Labeaga, José M; Teixidó, Jordi J
- Abstract
The global energy mix and cost structure of the power industry are experiencing a redefinition. Many countries are revamping electricity-pricing systems to guarantee fixed-cost recovery, often by raising the fixed charge of two-part tariff schemes. However, a key assumption of two-part tariff schemes and associated fixed-cost recoveries is that consumers discriminate fixed from marginal costs. We conduct a quasi-experiment with data from a major electricity price reform recently implemented in Spain and find robust evidence indicating that consumers fail to distinguish between fixed and marginal costs. As a result, policymakers are not achieving the goal of cost recovery.
- Subjects
SPAIN; ELECTRICITY pricing; DIRECT costing; OVERHEAD costs; DEPRECIATION; COST structure
- Publication
Economic Journal, 2022, Vol 132, Issue 644, p1517
- ISSN
0013-0133
- Publication type
Article
- DOI
10.1093/ej/ueab076