Electricity price cross-subsidy: Experiences and lessons from other countries

Cross-subsidy in electricity prices is widely adopted in many countries to improve affordability and achieve higher electricity usage among low-income households. In a previous study (Francisco 2024), it was found that the existing criteria for the lifeline cross-subsidy not only unnecessarily increase electricity prices for other types of consumers (i.e., non-lifeline households, industrial, and commercial) but could also act as a deterrent for industries and businesses to locate in areas with many lifeline users.

 

This follow-up study was conceptualized to provide further support to the Department of Energy, which is in the process of improving the implementation of the lifeline rate. This study seeks to conduct a careful consultation with the literature, to review similar socialized pricing mechanisms in electricity implemented in other countries, and to summarize strategies that can be adapted by the DOE to help achieve their reform agenda.