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Funding for Universal Service Obligations in Electricity Sector: the case of green power development

Author

Listed:
  • Favard, P.
  • Mirabel, F.
  • Poudou, J.-C.

Abstract

The process of deregulation in network industries, in particular in the electric sector, raises the problem of financing the Universal Service Obligations (USO) corresponding to the production, transport and distribution operations. In this paper, we study three ways of funding for an USO of production, especially the green electricity development: the funding with cross-subsidies, the implementation of a fund (funding by a tax) and finally a voluntary funding system by direct subscriptions of consumers. We notably show that this last one Pareto dominates mostly, from a welfare point of view, the other scenarios.

Suggested Citation

  • Favard, P. & Mirabel, F. & Poudou, J.-C., 2002. "Funding for Universal Service Obligations in Electricity Sector: the case of green power development," Cahiers du LASER (LASER Working Papers) 2002.06, LASER (Laboratoire de Science Economique de Richter), Faculty of Economics, University of Montpellier 1.
    • Handle: RePEc:mop:lasrwp:2002.06
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    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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