IDEAS home Printed from https://ideas.repec.org/p/ccp/wpaper/wp07-08.html
   My bibliography  Save this paper

Potential Impact of Electricity Reforms on Turkish Households

Author

Listed:
  • Ncemiddin Bagdadioglu

    (Department of Public Finance, Hacettepe University)

  • Alparslan Basaran

    (Department of Public Finance, Hacettepe University)

  • Catherine Waddams Price

    () (Centre for Competition Policy, University of East Anglia)

Abstract

This paper analyses the potential effect of electricity reform on different households, using a series of potential scenarios for price changes, and consumption information from the 2003 Turkish Household Expenditure Survey. Turkey is emerging as a regional energy market, hub, and transit country between Europe and Asia, and has been reforming her energy sector in line with EU Energy Acquis since 2001. Introducing a cost reflective tariff is an essential component of Turkish electricity reform. Yet, this tariff structure might create real hardship for, and thus strong opposition from, some households, which might not be compensated through the rather underdeveloped Turkish social security system. Perhaps to avoid the possible political costs of this before the general election of November 2007, the Turkish Government disregarded the sector regulator EMRA's insistence, and postponed pursuing such tariff for at least five years. Identifying these households, however, helps to anticipate opposition, and perhaps to mitigate it partially through compensation schemes. This might also facilitate Turkey's integration with the Energy Community of South East Europe created in 2005. To explore the likely effect of tariff changes on various groups of households we apply six scenarios. Firstly, we analyse the likely impact of EMRA's proposal of reflecting large regional variation in technical and non-technical losses. We also consider the effect of a potential efficiency saving from the proposed merger of distribution companies. Then, we explore the potential outcome of raising the currently low ratio of residential to industrial tariffs to OECD average. Furthermore, we study the effect of reducing the rather high level of taxes on households. Lastly, we examine the likely consequence of changing the present flat rate prices per kilowatt hour to a tariff which reflects more accurately the pattern of consumer-related and consumption-related costs.

Suggested Citation

  • Ncemiddin Bagdadioglu & Alparslan Basaran & Catherine Waddams Price, 2007. "Potential Impact of Electricity Reforms on Turkish Households," Working Papers 07-8, Centre for Competition Policy, University of East Anglia.
  • Handle: RePEc:ccp:wpaper:wp07-08
    as

    Download full text from publisher

    File URL: http://www.ccp.uea.ac.uk/publicfiles/workingpapers/CCP07-8.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Heffernan, Shelagh A, 1997. "Modelling British Interest Rate Adjustment: An Error Correction Approach," Economica, London School of Economics and Political Science, vol. 64(254), pages 211-231, May.
    2. Charles Kahn & George Pennacchi & Ben Sopranzetti, 1999. "Bank Deposit Rate Clustering: Theory and Empirical Evidence," Journal of Finance, American Finance Association, vol. 54(6), pages 2185-2214, December.
    3. Steven Salop & Joseph Stiglitz, 1977. "Bargains and Ripoffs: A Model of Monopolistically Competitive Price Dispersion," Review of Economic Studies, Oxford University Press, pages 493-510.
    4. Schindler, Robert M. & Wiman, Alan R., 1989. "Effects of odd pricing on price recall," Journal of Business Research, Elsevier, vol. 19(3), pages 165-177, November.
    5. Cass R. Sunstein & Richard H. Thaler, 2003. "Libertarian paternalism is not an oxymoron," Conference Series ; [Proceedings], Federal Reserve Bank of Boston.
    6. Grossman, Sanford J & Stiglitz, Joseph E, 1980. "On the Impossibility of Informationally Efficient Markets," American Economic Review, American Economic Association, pages 393-408.
    7. David Neumark & Steven A. Sharpe, 1992. "Market Structure and the Nature of Price Rigidity: Evidence from the Market for Consumer Deposits," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 657-680.
    8. Berger, Allen N & Hannan, Timothy H, 1989. "The Price-Concentration Relationship in Banking," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 291-299, May.
    9. Richard H. Thaler & Cass R. Sunstein, 2003. "Libertarian Paternalism," American Economic Review, American Economic Association, vol. 93(2), pages 175-179, May.
    10. Richard W. Kopcke & Jane Sneddon Little & Geoffrey M.B. Tootell, 2004. "How humans behave: implications for economics and economic policy," New England Economic Review, Federal Reserve Bank of Boston, pages 3-35.
    11. Eldar Shafir & Peter Diamond & Amos Tversky, 1997. "Money Illusion," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 341-374.
    12. Franks, Julian & Mayer, Colin & Correia da Silva, Luis, 2003. "Asset Management and Investor Protection: An International Analysis," OUP Catalogue, Oxford University Press, number 9780199261932.
    13. Kee H. Chung & Bonnie F. Van Ness & Robert A. Van Ness, 2004. "Trading Costs And Quote Clustering On The Nyse And Nasdaq After Decimalization," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 27(3), pages 309-328.
    14. Hannan, Timothy H. & Liang, J. Nellie, 1993. "Inferring market power from time-series data : The case of the banking firm," International Journal of Industrial Organization, Elsevier, vol. 11(2), pages 205-218, June.
    15. Tversky, Amos & Kahneman, Daniel, 1986. "Rational Choice and the Framing of Decisions," The Journal of Business, University of Chicago Press, vol. 59(4), pages 251-278, October.
    16. Kaushik Basu, 2006. "Consumer Cognition and Pricing in the Nines in Oligopolistic Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(1), pages 125-141, March.
    17. Heffernan, Shelagh A., 2002. "How do UK financial institutions really price their banking products?," Journal of Banking & Finance, Elsevier, vol. 26(10), pages 1997-2016, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Household survey; electric utilities; government policy;

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ccp:wpaper:wp07-08. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Cheryl Whittkaer). General contact details of provider: http://edirc.repec.org/data/ccueauk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.