Heterogeneous effects of government energy assistance programs: Covid-19 lockdowns in the republic of Georgia

During the Covid-19 pandemic, the governments of many countries adopted measures to support the population during the lockdowns and periods of reduced economic activity. In the Republic of Georgia, in April 2020 the government announced that it would pay the electricity bills of residential customers in April and May 2020, effectively making electricity free, as long as usage would not exceed 200 kWh/month. Consumers using more than 200 kWh would pay the regular tariff on the entire consumption (not just the kWh above 200). In August 2020, the government announced that the policy would be in force again in November and December 2020, and January and February 2021. We examine meter readings from a 10 % sample of the country's customers base outside of the Tbilisi city limits to see if the response to the policy is consistent with the predictions from economic theory. We find that, as suggested by economic theory, in the months when the policy is in place low-volume consumers increase their electricity usage and high-volume consumers decrease it in an effort to make the 200 kWh mark. However, we do not find any evidence of “bunching” at 200 kWh or of a “hole” thereafter. The average household increased usage by some 5 % above and beyond their normal. This figure however masks considerable heterogeneity in the effects of the policy across urban, rural, and “high mountain” status areas.