Johannesson Linden, Α., Kalantzis, F., Maincent, E. & Pienkowski, J. (2014) “Electricity Tariff Deficit: Temporary or Permanent problem in the EU?“, European Economy. Economic Papers. 534. October.
In the recent years electricity tariff deficits emerged in Spain, Portugal, Greece and in some other Member States. Tariff deficits are shortfalls of revenues in the electricity system, which arise when the tariffs for the regulated components of the retail electricity price are set below the corresponding costs borne by the energy companies. This paper determines the existence of tariff deficits in the various Member States on the basis of common criteria and describes their common features, as well as particular characteristics of tariff deficits in the countries concerned. As a second step, an econometric analysis is carried out as a second step to identify the drivers of the emergence of a tariff deficit. The analysis of tariff deficits is preceded by a section which describes the functioning of the electricity market, including price formation and different forms of government intervention, such as support to renewable energy and price regulation. The final section discusses the impact on the individual firms and on public finances and provides the conclusions.
Relevant posts:
- Leach, G. (2014) “Forget the dodgy numbers: Leaving the EU makes economic sense“, City A.M. free daily business newspaper, 28 May.
- Booth, S. (2014) “The European Parliament is a failed experiment in pan-European democracy – national parliaments are the key to solving the democratic deficit“, LSE EUROPP, 21 May.
- Bellamy, R., Kröger, S., (2013), “Representation Deficits and Surpluses in EU Policy-making”, Journal of European Integration, Vol. 35, Issue 5, pp.477-497.