The Economic Impact of Electricity Price Increases on ... - Eskom
The Economic Impact of Electricity Price Increases on ... - Eskom
The Economic Impact of Electricity Price Increases on ... - Eskom
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A sudden adjustment to ‘cost-reflective’ prices combined with<br />
transiti<strong>on</strong> credits proporti<strong>on</strong>al to current c<strong>on</strong>sumpti<strong>on</strong> is a policy<br />
alternative to gradual price adjustments. <str<strong>on</strong>g>The</str<strong>on</strong>g> advantage is that it<br />
provides an immediate incentive for c<strong>on</strong>sumers to become more<br />
energy-efficient but could be costly to administer<br />
• An alternative to gradual price adjustments would be to move electricity prices suddenly to costreflective<br />
levels and then recycle revenue to c<strong>on</strong>sumers in the form <str<strong>on</strong>g>of</str<strong>on</strong>g> a temporary subsidy or<br />
‘transiti<strong>on</strong> credit’ which would be proporti<strong>on</strong>al to the c<strong>on</strong>sumer’s initial or current energy<br />
c<strong>on</strong>sumpti<strong>on</strong>.<br />
• <str<strong>on</strong>g>The</str<strong>on</strong>g> advantage <str<strong>on</strong>g>of</str<strong>on</strong>g> this approach is that it provides an immediate incentive for c<strong>on</strong>sumers to<br />
investment in more energy-efficient technologies because the credit is <strong>on</strong>ly provided <strong>on</strong> historical<br />
c<strong>on</strong>sumpti<strong>on</strong> and any additi<strong>on</strong>al c<strong>on</strong>sumpti<strong>on</strong> is immediately subject to cost-reflective prices.<br />
• <str<strong>on</strong>g>The</str<strong>on</strong>g> drawback <str<strong>on</strong>g>of</str<strong>on</strong>g> this approach (relative to more gradual price increases) is the cost <str<strong>on</strong>g>of</str<strong>on</strong>g> administering<br />
such a program but if it were feasible to administer efficiently, this policy opti<strong>on</strong> would have the<br />
same benefits as a gradual price adjustment without incurring the costs.<br />
Providing<br />
targeted<br />
support to<br />
vulnerable<br />
industries<br />
Accelerated<br />
EEDSM<br />
45<br />
Subsidies<br />
Policy Opti<strong>on</strong>s<br />
Promoting<br />
competiti<strong>on</strong> in<br />
the electricity<br />
supply<br />
industry<br />
Gradual price<br />
adjustments<br />
Transiti<strong>on</strong> credits<br />
Transiti<strong>on</strong> Credits<br />
Exploring the<br />
policy opti<strong>on</strong>s<br />
available<br />
©2012 Deloitte Touche Tohmatsu Limited. All rights reserved.<br />
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