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On the Inequity of Flat-rate Electricity Tariffs

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  • Paul Simshauser
  • David Downer

Abstract

Proposals to reform default ‘flat-rate’ electricity tariffs are rarely met with enthusiasm by consumer groups or policymakers because they produce winners and losers. Proposals to initiate more cost-reflective time-of-use rates will be met with cautious interest if the basis of customer participation is ‘opt-in’. Using the smart meter data of 160,000 residential customers from the Victorian region of Australia’s National Electricity Market, our tariff model reveals that households in financial hardship are the most adversely affected from existing flat-rate structures. Even after network tariff rebalancing, Hardship and Concession & Pensioner Households are, on average, beneficiaries of more cost-reflective tariff structures once Demand Response is accounted for.

Suggested Citation

  • Paul Simshauser & David Downer, 2016. "On the Inequity of Flat-rate Electricity Tariffs," The Energy Journal, , vol. 37(3), pages 199-230, July.
    • Handle: RePEc:sae:enejou:v:37:y:2016:i:3:p:199-230
    DOI: 10.5547/01956574.37.3.psim
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    More about this item

    Keywords

    Dynamic Pricing; Electricity Tariffs; Smart Meters;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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