Residential Affordability
Addressing Affordability of Utility Services in Urban Households: Energy Efficiency Solutions
The economic transition in the post-Soviet economies necessitates a gradual (or sometimes abrupt) ending of the heavily subsidized utility prices from the Soviet era. However, many policymakers have been reluctant to raise heating and water tariffs to cost-recovery levels due to concerns that consumers will not be able to pay increased prices. The continuation of untargeted resource subsidies perpetuates unsustainable consumption patterns and hinders any real potential for providing more effective aid to households truly in need.
With support from the U.S. Agency for International Development (USAID), the Alliance to Save Energy conducted an extensive study that examines the potential for energy efficiency, particularly on the consumer demand side, to improve the affordability of utility services and improve the quality of life in households and communities.
The findings and recommendations of this study are based largely on the results of actual residential energy-efficiency projects that the authors documented in 26 case studies. In most of the projects examined for this study, energy-efficiency improvements helped households manage price hikes without severe effects on household welfare.
You can download in the following formats:
* Executive Summary (200 KB PDF)
* Full Report (800 KB PDF)
* Appendicies (13 MB PDF)
Low Income
In countries of Southeastern Europe with large percentages of the population living at or below the poverty line, rising energy prices are consuming household budgets. In Bulgaria, for example, prices of energy and water have experienced an annual growth of 1% (since 1997). Although this percentage may appear insignificant, the relative burden of energy costs on household budgets has almost doubled - from 6.7% in 1997 up to 12.1% in 2002. As part of the Alliance's work plan in Southeastern Europe, the RENEUER countries are developing analyses of low-income assistance programs and the income burdens of energy expenses on low-income consumers.
Bulgaria's Energy Strategy ranks the reduction and phasing-out of energy price subsidies among the country's medium-term priorities. The EnEffect paper focuses on the status of this process for heat, electricity, water and gas tariffs, outlines block tariffs to decrease the income burden on lower-income consumers and to promote efficiency within all income classes, and considers the most appealing energy sources for low-income consumers. EnEffect also completed a report on the burden of energy costs on the budgets of low-income consumers. This report compares the burden a single- and a two-block tariff on numerous income levels.
Another paper by EEC - the MUNEE partner in Albania - summarizes a number of studies on topics relevant to low-income assistance that were conducted over the past decade, identifies the main challenges to improvement of assistance programs, and makes recommendations for overcoming these challenges.
Read more...
Albania: Low Income Study
Bulgaria: Income Burden
Bulgaria: Evaluation of Energy and Water Tariffs for Households