The impact of increasing block tariff (“social norm”) of electricity consumption on the volume of consumption and payment discipline

The paper assesses the impact of a differentiated pricing scheme in some regions of Russia: once household electricity consumption reaches a certain limit, the price for kW per hour raises. The authors discovered that regions had adopted the scheme showed lower levels of electricity consumption than average in Russia and lower than the regions with similar climate and socio-economic features. The authors found no significant impact of pricing scheme on the levels of utilities bill debt among population. The paper estimated the dependence of household spending on electricity price for the majority of households. Setting a tariff directly depending on the amount of electricity consumed can lead to a drop in the standard of living of a large part of the population.