The welfare consequences of tariff rebalancing in the domestic gas market
The domestic energy markets in the United Kingdom are still in a process of structural change. Earlier this year, limited competition for the supply of household domestic gas was introduced, with full-scale competition expected to develop in the next few years. Competition for the supply of electricity to households is expected to begin in 1998. The introduction of competition in the supply of these energy goods will force tariffs to become more cost-reflective. Until now, maintaining crosssubsidies between consumer groups has not posed any difficulties, given that the suppliers of electricity as well as British Gas have enjoyed monopoly concessions. Profits lost by subsidising one group of consumers have been compensated by higher price-over-cost margins for other groups. Competition is likely to change this. New entrants will try to target market segments where current prices are above supply costs and will have no incentive to supply groups where costs are above prices. To survive, incumbents — who have universal services obligations — will be forced to end internal cross-subsidies.
Year of publication: |
1996
|
---|---|
Authors: | Gomez-Lobo, Andres |
Published in: |
Fiscal Studies. - Institute for Fiscal Studies (IFS). - Vol. 17.1996, 4, p. 49-65
|
Publisher: |
Institute for Fiscal Studies (IFS) |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Affordability And Subsidies In Public Urban Transport : What Do We Mean, What Can Be Done?
Estupinan, Nicolas, (2008)
-
Water Subsidy Policies : Comparison of the Chilean and Colombian Schemes
Gomez-Lobo, Andres, (2003)
-
Designing Direct Subsidies for Water and Sanitation Services : Panama—A Case Study
Foster, Vivien, (2000)
- More ...