The Electric Gini: Income Redistribution through Energy Prices

In theory, regulators concerned about inequality will deviate from efficient two-part tariffs, charging lower-than-efficient fixed monthly fees and higher-than-efficient per-kilowatt-hour prices. To quantify that relationship, we develop a measure of the redistributive extent utility tariffs: “electric Gini.” Utilities with higher electric Ginis shift more costs households using relatively little electricity to more. practice, US utilities whose ratepayers have unequal incomes Ginis. But demand is only loosely correlated income, which means prices are an indirect ineffective policy for countering income inequality. (JEL D31, L11, L94, L98)