Estimating recipient benefits and waste from lifeline electricity rates

Journal Article · Sun Nov 01 04:00:00 EST 1981 · Land Econ.; (United States)

DOI:https://doi.org/10.2307/3145669· OSTI ID:5684599

Scott, Jr, F A

Analysis of a transfer program such as lifeline rates requires an estimation of the value of the subsidy to recipients. Our estimation of the benefits to recipients reveals that for modest lifeline programs, very little waste results. More extensive lifeline programs (those beyond a 20% reduction) generate more waste to recipients. It should be noted that unless the rate reduction is substantial and the initial lifeline block very large, lifeline rates will not raise the real incomes of recipients significantly. Another characteristic of many lifeline proposals not discussed so far is the elimination of the minimum service charge. In addition to reduced rates, many lifeline programs stipulate that eligible customers do not have to pay the minimum service charge. Since all recipients except those who would not otherwise have hooked up to power will experience a pure income effect, this provision generates little waste to recipients. The dollar amount involved, however, typically is not significant. Only an extensive lifeline program can have even a noticeable effect on the living standards of recipients. The waste to recipients of such a program, however, would be substantial. Because lifeline rates transmit improper price signals to recipients and will lead those consumers to increase their consumption of energy inefficiently, widespread adoption of lifeline rates would seem to be an undesirable extension of current transfer programs. 8 references, 1 figure, 3 tables.

• Research Organization: Auburn Univ., AL
• OSTI ID: 5684599
• Journal Information: Land Econ.; (United States), Journal Name: Land Econ.; (United States) Vol. 57:4; ISSN LAECA
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
296000* -- Energy Planning & Policy-- Electric Power
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION
320603 -- Energy Conservation
Consumption
& Utilization-- Municipalities & Community Systems-- Public Utilities-- (1980-)
COST BENEFIT ANALYSIS
ECONOMIC ELASTICITY
ELECTRIC POWER
POWER
POWER DEMAND
RATE STRUCTURE