Lessons Learned from China’s Residential Tiered Electricity Pricing Reform (GSI)

In October 2010, China introduced a tiered electricity pricing (TEP) reform for the residential sector. Under such a TEP system, electricity consumers pay a low rate for an initial consumption block and a higher rate as they increase use beyond that block. Previously, households were charged a flat rate, which varied by province, regardless of how much each consumed. This GSI paper reviews and evaluates the TEP reform, examining the impacts on equity, efficiency and subsidy expenditure.