Electricity Regulators

Electricity Regulators banner

How could U.S. electricity regulators effectively price consumption use to address income inequality?

Alberta School of Business researcher finds...

  • U.S. electricity regulators need to depart from a simple two-part scheme to address concerns about income inequality.
  • A new measure called the 'electric Gini' was developed to address this concern.
  • Effective pricing, based on income, is achieved when regulators with higher 'electric Ginis' (more redistributive tariffs) shift costs from households that use relatively little electricity to households that use more.
  • In other words, U.S. electricity regulators need to charge lower-than-efficient fixed monthly fees and higher-than-efficient per-kWh prices and increasing block prices to target higher users with even higher prices.

Research Abstract:

This paper examines the efficiency of decentralized leadership where regional governments contribute to the provision of multiple regional and national public goods. Unlimited decentralized leadership is inefficient because regional governments have incentives to overspend resources in the provision of regional public goods. Selective decentralized leadership is socially efficient if commitments are restricted to regional contributions to national public goods, since in this case regional governments face "correct" incentives when they contribute to national and regional public goods. The model applies to different types of national public goods. Aggregation technologies include the orthodox summation, and nonlinear and asymmetric transformation functions.

The article, "Selective decentralized leadership" is authored by Emilson Silva and is published in the Journal of Urban Economics.

Emilson Silva Emilson Silva investigates the design and implementation of environmental and energy policies in developed and developing economies. In my work, I build game-theoretical models to analyze the behaviour of various economics agents, including industries, consumers and governments. He studied economics earning his BS at the Universiadade de Brasilia, and MS and PhD in Development and Public Economics at the University of Illinois at Urbana-Champaign. Emilson is currently the Department Chair and Professor of Marketing, Business Economics and Law at the Alberta School of Business.