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An Analytical Study of Cross Subsidy Impact on Electricity Demand from Industries: Case of Electricity Distribution Utilities in India

Author

Listed:
  • Naveen Agarwal

    (TERI School of Advanced Studies, Delhi, India,)

  • Naqui Anwer

    (Department of Energy and Environment, TERI School of Advanced Studies, Delhi, India.)

Abstract

In India, because of socio-economic constraints, there is cross subsidy regime in electricity sector under that industrial consumers cross subsidize agricultural and residential consumers. This paper attempts to analyze the impact of cross subsidy on the industrial demand from the state distribution units. To measure the impact, elasticity of electricity demand in context of cross subsidy is estimated and to estimate cross subsidy elasticity, panel data techniques are used. The main finding of the paper is that the impact of cross subsidy on the Discom s industrial load in is limited. The elasticity value of cross subsidy is -0.54, which is significantly lower than 1 (the perfectly elastic value), which means that change in cross subsidy does not have any meaningful influence on the electricity demand of the industrial consumers.

Suggested Citation

  • Naveen Agarwal & Naqui Anwer, 2019. "An Analytical Study of Cross Subsidy Impact on Electricity Demand from Industries: Case of Electricity Distribution Utilities in India," International Journal of Energy Economics and Policy, Econjournals, vol. 9(6), pages 305-309.
    • Handle: RePEc:eco:journ2:2019-06-35
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    References listed on IDEAS

    as
    1. Bose, Ranjan Kumar & Shukla, Megha, 1999. "Elasticities of electricity demand in India," Energy Policy, Elsevier, vol. 27(3), pages 137-146, March.
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    4. Chattopadhyay, Pradip, 2004. "Cross-subsidy in electricity tariffs: evidence from India," Energy Policy, Elsevier, vol. 32(5), pages 673-684, March.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Cross Subsidy; Open Access; Electricity Demand;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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