Welfare study of lifeline electricity rates

Loading...
Thumbnail Image

Date

1989

Journal Title

Journal ISSN

Volume Title

Publisher

Montana State University - Bozeman, College of Agriculture

Abstract

Increases in electricity prices have caused many states to consider adopting an increasing block rate "lifeline" structure. Proponents argue that a lifeline rate structure provides low income households with a basic amount of electricity at a reasonable price, and encourages all consumers to conserve electricity. This thesis developed a framework to analyze the welfare effects of adopting a lifeline rate structure for the state of Montana. The properties of a linear demand system, expenditure function, and compensated demand function are developed in detail. A method for calculating compensating variation from this demand system is applied to a utility model with a kinked budget constraint. Using this method it is determined that the proposed rate structure would not be beneficial to low income households of the state of Montana.

Description

Keywords

Citation

Copyright (c) 2002-2022, LYRASIS. All rights reserved.