Household Electricity Consumption in Kyrgyzstan: Determinants and Reforms

Abstract

Residential sector of the country consumes 63% of overall produced electricity. The block tariff rates system applied for the category do not reach recovery rates. Before further tariff reforms to be implied, it is vital to create a profile of end-users. This thesis work finds out the factors shaping the electricity demand on the micro-level by analysing the data from the Life in Kyrgyzstan 2013 household survey. With many quietly invariant over waves of survey variables used in this study the cross-sectional form makes more sense. Results show electricity use vary among income groups, provinces, depending on the characteristics of the head, the size of the dwelling, other household expenditures, number of electric appliances available and the choice of them for either heating or cooking purposes. Next, the impact of tariff reforms is estimated based on the rates defined in a Midterm Tariff Policy 2014-2017. The aim of considering possible changes in real income of households is to consider assumed in the document 20% increase of lower block tariffs. Calculations show the changes to be not more than 0.1% for those who are falling under the user-friendly limit of 700 kWh per month and crossing it can cause up to 10% decrease in real income among all ten income quantiles. The implications for regulators include the allowance of implementation of the policy with supportive programs for those consumers who can be affected negatively.