Korea implements electricity block pricing not only to control demand but also to redistribute income. Block pricing has been commonly used for utilities that public enterprises produce. As low income households under block pricing pay averagely low price, block pricing has been considered an appropriate way to assist the poor. Though direct subsidy to low income households is more effective to enhance welfare, many countries implement block pricing to achieve fairness and cost recovery.
Recently, the low cost-recovery rate of the monopolistic public enterprise producing electricity in Korea has pushed the enterprise to increase electricity retail prices. This has caused controversies in what is the right way to price electricity, what is the adequate price level, and how to modify the complicated block pricing whose 6th block price is 11 times higher than the first block. Thus, we evaluate the current block pricing and alternative price structures, in order to find the best pricing structure.
Establishing 9 scenarios suggested by the various organizations, we analyze the effect of the alternative block pricing on the consumption and expense by household income deciles. Furthermore, to evaluate the redistribution effect of block pricing, we analyze the welfare change by household income deciles and the changes in the overall social welfare as well as the degree of inequality. (The rest omitted)
- 공공요금체계의 소득재분배효과(The redistributional effect of electricity pricing)
- 유정숙; 임소영
공공요금체계의 소득재분배효과(The redistributional effect of electricity pricing)
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Economic Administration
Industry and Technology < Energy