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Electricity tariff design for transition economies: Application to the Libyan power system


  • Reneses, Javier
  • Gómez, Tomás
  • Rivier, Juan
  • Angarita, Jorge L.


This paper presents a general electricity tariff design methodology, especially applicable for transition economies. These countries are trying to modernize their power systems from a centralized environment (with normally, a public vertically integrated electric company) to a liberalized framework (unbundling electricity companies and, eventually, starting a privatization process). Two issues arise as crucial to achieving a successful transition: i) ensuring cost recovery for all future unbundled activities (generation, transmission, distribution and retailing), and ii) sending the right price signals to electricity customers, avoiding cross-subsidies between customer categories. The design of electricity tariffs plays a pivotal role in achieving both objectives. This paper proposes a new tariff design methodology that, complying with these two aforementioned criteria, requires a low amount of information regarding system data and customer load profiles. This is important since, typically, volume and quality of data are poor in those countries. The presented methodology is applied to computing tariffs for the Libyan power system in 2006, using real data.

Suggested Citation

  • Reneses, Javier & Gómez, Tomás & Rivier, Juan & Angarita, Jorge L., 2011. "Electricity tariff design for transition economies: Application to the Libyan power system," Energy Economics, Elsevier, vol. 33(1), pages 33-43, January.
  • Handle: RePEc:eee:eneeco:v:33:y:2011:i:1:p:33-43

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    References listed on IDEAS

    1. Pollitt, Michael, 2005. "The role of efficiency estimates in regulatory price reviews: Ofgem's approach to benchmarking electricity networks," Utilities Policy, Elsevier, vol. 13(4), pages 279-288, December.
    2. Liston, Catherine, 1993. "Price-Cap versus Rate-of-Return Regulation," Journal of Regulatory Economics, Springer, vol. 5(1), pages 25-48, March.
    3. Rodri­guez Ortega, Mari­a Pi­a & Pérez-Arriaga, J. Ignacio & Abbad, Juan Rivier & González, Jesús Peco, 2008. "Distribution network tariffs: A closed question?," Energy Policy, Elsevier, vol. 36(5), pages 1712-1725, May.
    4. Lowry, Mark Newton & Getachew, Lullit, 2009. "Statistical benchmarking in utility regulation: Role, standards and methods," Energy Policy, Elsevier, vol. 37(4), pages 1323-1330, April.
    5. Jamasb, T. & Pollitt, M., 2000. "Benchmarking and regulation: international electricity experience," Utilities Policy, Elsevier, vol. 9(3), pages 107-130, September.
    6. Feldstein, Martin S, 1972. "Distributional Equity and the Optimal Structure of Public Prices," American Economic Review, American Economic Association, vol. 62(1), pages 32-36, March.
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    Cited by:

    1. Wang, Zhaohua & Zhang, Bin & Zhang, Yixiang, 2012. "Determinants of public acceptance of tiered electricity price reform in China: Evidence from four urban cities," Applied Energy, Elsevier, vol. 91(1), pages 235-244.
    2. Steele Santos, Paulo E. & Marangon Lima, Jose W. & Leme, Rafael C. & Leite Ferreira, Tiago G., 2012. "Distribution charges for consumers and microgeneration considering load elasticity sensitivity," Energy Economics, Elsevier, vol. 34(2), pages 468-475.
    3. Steele Santos, Paulo E. & Coradi Leme, Rafael & Galvão, Leandro, 2012. "On the electrical two-part tariff—The Brazilian perspective," Energy Policy, Elsevier, vol. 40(C), pages 123-130.
    4. Merkel, Erik & Fehrenbach, Daniel & McKenna, Russell & Fichtner, Wolf, 2014. "Modelling decentralised heat supply: An application and methodological extension in TIMES," Energy, Elsevier, vol. 73(C), pages 592-605.
    5. Dupont, B. & De Jonghe, C. & Olmos, L. & Belmans, R., 2014. "Demand response with locational dynamic pricing to support the integration of renewables," Energy Policy, Elsevier, vol. 67(C), pages 344-354.


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