|| Salim Turdaliev BSc M.A., Anna Alberini, Milan Ščasný|
||Article in collection
|ISSN / ISBN:
||5th AIEE Energy Symposium - Current and Future Challenges to Energy Security - Executive Summaries. The Italian Association of Energy Economists (AIEE)
||Rome , Italy
||Residential electricity demand, Transition Economy, Natural Experiment, Increasing block rates, Attentiveness, CO2 emissions reductions.
||D12, Q41, Q48
|| GAUK 454120 The effect of non-linear tariff on energy demand and investment in electric durables in Transition Economies: Micro data estimation and natural experiment
||Residential electricity consumption is generally regarded as relatively inelastic with respect to price, which implies that a carbon tax may have limited effectiveness in reducing CO2 emissions from the residential sector and encouraging transition to renewable sources of energy. Do these considerations apply in a country like Russia, where most power is generated from natural gas and coal? In this paper we estimate the price elasticity of residential demand using household-level data from several waves of the Russian Household Budget Survey. We have a panel dataset. We take advantage of the variation in tariffs across regions and over time, and of the introduction of increasing block tariff schemes in a number of regions. We show that in those regions consumers appear to be aware of the block cutoffs, even though the latter are household- and dwelling-specific, to the point that there are a total of 35 different tier cutoffs. Based on these results, we estimate the price elasticity of electricity demand to be around -0.10. We also predict the associated changes in electricity consumption, CO2 emissions, and revenues if the similar IBR polices are implemented countrywide.