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Is increasing-block electricity pricing effectively carried out in China? A case study in Shanghai and Shenzhen

Liu, Chang, Lin, Boqiang
Energy policy 2020 v.138 pp. 111278
case studies, cities, electric energy consumption, electricity, electricity costs, energy efficiency, households, models, prices, China
China is the largest emerging economy and electricity consumer in the world. Despite the rapid increase in residential electricity consumption, retail residential electricity price in China remained at a low level, leading to large amounts of cross-subsidies. To address this issue, the increasing-block electricity pricing (IBP) system was established in the residential sector nationwide in 2012. This paper depicts the detailed implementation of the IBP in Shanghai and Shenzhen, which are typical Chinese cities. Overall, the IBP motivates residential electricity saving to some extent. However, 15.55% of the respondents still do not know about the IBP. Most respondents have limited knowledge about the contents of the IBP. 58% of the respondents were unaware that retail residential electricity prices were subsidized by the government. Furthermore, binary response models were applied to analyze the influencing factors of respondents' electricity saving feedback on the IBP. The analysis indicates that if households are large, apply time-of-use (TOU) pricing, purchase energy-efficient appliances, have adequate knowledge of electricity saving and IBP contents, or understand the situation of electricity cross-subsidy, they are more likely to be influenced by the IBP to save electricity. The government should enhance public's awareness about IBP, optimize the pricing of each block and guide the residents to understand the existence of electricity subsidy.