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Tariff flags and electricity consumption response in Brazil

Author

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  • Garcia, Alexandre Schwinden
  • Alves, Frederick Fagundes
  • Pimentel Filgueiras, João Marcello

Abstract

We evaluated the effectiveness of the tariff flags system (TFS) on electricity consumption in Brazil. Tariff flags represent a demand-side management (DSM) mechanism used in the Brazilian electricity sector and act as a signal sent to agents about electricity production costs. The effectiveness of the flags in reducing electricity consumption is assessed using monthly consumption data from 26 Brazilian states between 2015 and 2022, and panel data models with fixed effects were estimated. The results indicate that only the water scarcity flag effectively reduced electricity consumption by 2.89%. When the Yellow, Red I, and Red II flags were in operation, there was a median increase in electricity consumption of 0.61%, 4.24%, and 1.47%, respectively. In addition, the other variables indicate that the higher the temperature and income of the States, the higher the consumption, and the higher the electricity tariff, the lower the consumption. We also observed persistence in the consumption of electricity in the States, possibly related to consumer habits.

Suggested Citation

  • Garcia, Alexandre Schwinden & Alves, Frederick Fagundes & Pimentel Filgueiras, João Marcello, 2024. "Tariff flags and electricity consumption response in Brazil," Utilities Policy, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:juipol:v:88:y:2024:i:c:s0957178724000444
    DOI: 10.1016/j.jup.2024.101751
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    Keywords

    Tariff flags; Electricity; Brazil;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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