Electricity Subsidies in Low-Cost Jurisdictions: The Case of British Columbia

Pierre-Olivier Pineau

Canadian Public Policy, 2008, vol. 34, issue 3, 379-394

Abstract: Energy subsidies foster energy consumption and contribute to environmental degradation. Furthermore, energy subsidies are common in developed countries, where energy consumption is relatively high, and tend to favour higher-income households. This paper reviews the concept of energy subsidy and estimates the importance of electricity subsidies to residential consumers in British Columbia (BC). It also assesses the distribution of this subsidy across income groups. Results show that high-income households, using more electricity than lower-income households, receive more than $500 per year as an electricity subsidy (through regulated low price). Low-income households get about $200. In British Columbia, this subsidy is equivalent to about $489 million per year. Bringing residential electricity prices closer to the regional export price would increase profits by $432 million, even after allowing for a direct transfer payment program targeting low-income households and compensating them for higher prices. BC residential electricity consumption would be reduced by 25 percent.

Date: 2008
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