Energy efficiency programs in the context of increasing block tariffs: The case of residential electricity in Mexico

Hancevic, Pedro and Lopez-Aguilar, Javier (2017): Energy efficiency programs in the context of increasing block tariffs: The case of residential electricity in Mexico.

Abstract

Increasing block pricing schemes represent difficulties for applied researchers who try to recover demand parameters, in particular, price and income elasticities. The Mexican residential electricity tariff structure is amongst the most intricate around the globe. In this paper, we estimate the residential electricity demand and use the corresponding structural parameter estimates to simulate an energy efficiency improvement scenario, as suggested by the Energy Transition Law of December 2015. The simulated program consists of a massive replacement of electric appliances (air conditioners, fans, refrigerators, washing machines, and light-bulbs) for more energy-efficient units. The main empirical findings are the following: overall residential electricity consumption decreases 8.9% and the associated expenditure falls 11.1%. Additionally, the electricity subsidy decreases 360 million of USD per year and there is an annual cut in CO2 emissions of 3.5 million of tons.

• Item Type: MPRA Paper
• Language: English
• Keywords: increasing block pricing; energy efficiency; residential electricity users; electric appliances; energy subsidies; air pollution.
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis; L - Industrial Organization > L5 - Regulation and Industrial Policy > L50 - General; L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L94 - Electric Utilities; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q40 - General; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q53 - Air Pollution ; Water Pollution ; Noise ; Hazardous Waste ; Solid Waste ; Recycling

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