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A Welfare Measure of a New Type of Energy Assistance Program

Kenneth W. Costello

Year: 1988
Volume: Volume 9
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol9-No3-6
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Abstract:
The sharp increase in utility rates since the 1970s has inflicted great hardship on low-income households. For many, paying their utility bills means sacrificing the purchase of other commodities essential to their economic well-being.' Another symptom of this problem is exhibited by the increased number of low-income people whose utility service has been cut off. Energy assistance programs have been instituted to cope with this serious problem. The major objectives of these programs are: (a) to make energy more affordable to the poor, thereby reducing the number of service disconnections, and (b) to limit how much the poor must pay for energy so that more funds are available for purchasing other essential commodities.



What Are the Benefits of Government Assistance with Household Energy Bills? Evidence from Ukraine

Anna Alberini and Nithin Umapathi

Year: 2024
Volume: Volume 45
Number: Number 3
DOI: 10.5547/01956574.45.3.aalb
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Abstract:
On February 24, 2022, Russian Federation troops invaded Ukraine. Ukraine was previously at war with Russia in 2014, and in April 2015, the government abruptly raised the natural gas tariffs to residential customers. It also scaled up its energy assistance program, the HUS. We examine the welfare effects of the HUS. Using Ukraine's Household Budget Survey, we find that after the tariff hike, the average household that did not receive the HUS spends 11% of its income on electricity, gas, and fuels, meeting the definition of "fuel poor." The average share among households that do receive the subsidy is 6–8%. The HUS cuts the rate of fuel poverty in half and brings considerable consumer surplus gains (6% of income), at a price tag of 1–2.5% of GDP. Meaningful savings would be achieved with only a moderate loss of consumer surplus if the HUS was cut in half. Social tariffs or replacing the HUS with a one-time energy efficiency subsidy would be sustainable and entail modest or no welfare losses.





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