Electricity price cross-subsidy: Experiences and lessons from other countries

Cross-subsidy in electricity prices is widely adopted in many countries to improve the affordability and achieve higher electricity usage among the low-income households. In a previous study (Francisco 2024) it was found that the existing criteria for the lifeline cross-subsidy, not only unnecessarily increases electricity price for other types of consumers (i.e. non-lifeline households, industrial, commercial) but could also act as a deterrent for industries and businesses to locate in areas with many lifeline users.

 

This follow-up study was conceptualized to provide further support to the Department of Energy, which is in the process of improving the implementation of the lifeline rate. This study seeks to conduct a careful consultation with the literature, to review similar socialized pricing mechanism in electricity implemented in other countries and summarize strategies that can be adapted by the DOE to help achieve their reform agenda.