The tradeoff between equity and efficiency in electric utility rate structures : a comment on the TVA approach

by Jan Paul Acton


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Although they did not always identify them as conflicting, energy policymakers often have two conflicting objectives: (1) to ease the impact of rapidly rising energy prices, particularly on the poor or those with fixed incomes, and (2) to promote efficient uses of energy. This Note identifies each type of objective and draws several examples from policies adopted in TVA and in California. It discusses when particular policies are likely to involve greater sacrifices of the other objective and when they are more likely to minimize adverse impacts in the second objective. The Note serves as a comment on a paper by Hemphill and Owens in Hans Landsberg (ed.), High Energy Costs: Assessing the Burden, Resources for the Future, Washington, D.C., 1982.

This report is part of the RAND Corporation Note series. The note was a product of the RAND Corporation from 1979 to 1993 that reported other outputs of sponsored research for general distribution.

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