ESRI Working Paper No. 744 - February 2023 - The equity and efficiency of electricity network

This follows the prece- dent in capacity-based cost allocation taken by the Irish regulator in many tariff-related decisions (Commission for Regulation of Utilities, 2022b) and also the approach taken for capacity-related charges in jurisdictions such as Italy and the Netherlands Europe Economics (2021).11 Finally, we take the sum total of fixed-apportioned revenue and divide by the number of hous. [...] Should the prices change, house- hold welfare will change according to the change in the standing charge and the change in the volumetric charge. [...] The benefit of the Coasian reform at the household level is driven by the quantity of electricity consumed. [...] This is the first paper to estimate the welfare effects of electricity network tariff reform on cost-reflective principles and is the first to consider the welfare implications of capacity-related retail charges. [...] The distribution of the impact at the household level is predicated on the extent with which the uniform increase in standing charge is offset by the welfare gain associated with a lower volumetric charge.