The Impact of Electricity Market Reform on Consumers

The Impact of Electricity Market Reform on Consumers

by Waddams Price, C. & Pham, K.

Abstract: We examine the effect of current electricity market reform on residential consumers, using a sequence of hypothetical scenarios which are likely to be prompted by reform. These include raising tariffs to cost-reflective levels and introducing a standing charge to recover 10% of the revenue to mirror cost-reflective structures. For Albania and Bulgaria, where household expenditure surveys and electricity tariffs are available, we analyse the effects of each scenario according to expenditure decile and region. We compare these results to findings from a previous study of Turkey. The impact of reforms varies considerably, depending on how far current tariffs reflect the long run marginal costs of supply, but likely reform scenarios will adversely affect low income households more than others.