Cross-Subsidy As A Social Support Measure: International Experience Of Public Administration In Electric Power Industry

The paper focuses on international experience of an energy policy tool application: cross-subsidy in electric power industry between the industry and households, as well as approaches to its reduction. Cross subsidization is introduced as a social support measure, while it bears a number of negative consequences, including the allocation of the largest share of subsidy to the wealthy households, as well as in creased costs for business that are reflected in the prime cost of goods and services. The study includes a research literature review, analysis of ultimate power tariffs and energy policy measures in different countries, as well as content analysis of related media publications. The research indicates that tariffs for industrial consumers in the majority of countries are two to three times lower than for households. The review of energy policy tools has proved that developed countries seem to be more inclined to apply market mechanisms, while for the developing economies with a more significant level of state intervention it is typical to artifi cially restrain the household tariff growth. The research findings confirm the hypothesis: tariff policy measures are not enough for effi cient resolution of cross-subsidy issues in electric power industry. A wider range of integrated social and economic policy tools from related areas of public administration have to be applied.