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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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    File URL: http://www.laser.univ-montp1.fr/Cahiers/WPL060202.pdf
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    References listed on IDEAS

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    1. Armstrong, Mark & Doyle, Chris & Vickers, John, 1996. "The Access Pricing Problem: A Synthesis," Journal of Industrial Economics, Wiley Blackwell, vol. 44(2), pages 131-150, June.
    2. Chone, Philippe & Flochel, Laurent & Perrot, Anne, 2000. "Universal service obligations and competition," Information Economics and Policy, Elsevier, vol. 12(3), pages 249-259, September.
    3. Mirabel, Francois & Poudou, Jean-Christophe, 2004. "Mechanisms of funding for Universal Service Obligations: the electricity case," Energy Economics, Elsevier, vol. 26(5), pages 801-823, September.
    4. Jeremy Greenwood & R. Preston McAfee, 1991. "Externalities and Asymmetric Information," The Quarterly Journal of Economics, Oxford University Press, vol. 106(1), pages 103-121.
    5. Mirabel, Francois & Poudou, Jean-Christophe, 2004. "Mechanisms of funding for Universal Service Obligations: the electricity case," Energy Economics, Elsevier, vol. 26(5), pages 801-823, September.
    6. Wiser, Ryan H. & Fowlie, Meredith & Holt, Edward A., 2001. "Public goods and private interests: understanding non-residential demand for green power," Energy Policy, Elsevier, vol. 29(13), pages 1085-1097, November.
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    More about this item

    Keywords

    ELECTRICITY ; ENVIRONMENT ; REGULATION ; NETWORK ; UNIVERSAL SERVICE;
    All these keywords.

    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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