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Sustainability 2018, 10(5), 1599; https://doi.org/10.3390/su10051599

Cross-Subsidies and Government Transfers: Impacts on Electricity Service Quality in Colombia

1
China Center for Special Economic Zone Research, Shenzhen University, Shenzhen 518060, China
2
School of Kinesiology, University of Michigan, Ann Arbor, MI 48109, USA
3
Department of Transportation Economics and Logistics Management, College of Economics, Shenzhen University, Shenzhen 518060, China
*
Author to whom correspondence should be addressed.
Received: 17 April 2018 / Revised: 10 May 2018 / Accepted: 11 May 2018 / Published: 16 May 2018
(This article belongs to the Collection Power System and Sustainability)
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Abstract

An affordable and reliable supply of electricity service is essential to encourage sustainable social development in developing countries. Colombia uses cross-subsidies to prompt electricity usage for poor households. This raises the issue of whether charging lower prices to poor households, while boosting their consumption, induces utilities to lower the quality of service received by them. This paper uses unique databases and examines how underfunded cross-subsidies affect perceived electricity service quality across consumer groups. Results indicate that when facing financial deficits, utilities provide lower perceived service quality to subsidized consumers than to residents paying surcharges. The difference in perceived quality across consumer groups is reduced by an increase in the amount of (external) government transfers. To prompt electricity consumption by the poor, the Colombian government should fund subsidies, strengthen quality regulation, and increase the transparency and reliability of government transfers. View Full-Text
Keywords: cross-subsidies; government transfers; electricity; service quality cross-subsidies; government transfers; electricity; service quality
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
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Li, F.; Wang, W.; Yi, Z. Cross-Subsidies and Government Transfers: Impacts on Electricity Service Quality in Colombia. Sustainability 2018, 10, 1599.

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