Household Electricity Default in Brazil: Evidence from Billing Data

This paper aims to examine the key factors influencing default rates among residential electricity consumers in Brazil. To achieve this, we use a unique dataset comprising monthly electricity bills, and we combine it with several administrative data sources. By leveraging the policy designs adopted by the regulator, we employ a causal inference approach to identify the effects of tariff changes and enforcement actions implemented by electricity distributors on default rates. Our findings indicate that an increase in electricity tariffs raises the likelihood of default. Furthermore, the results reveal that power cuts represent the primary tool for combating default, and allowing such cuts can reduce the default duration by up to 9%. These findings contribute to the understanding of the factors influencing household default behavior and their implications for ensuring electricity affordability.