The cost of power: Electricity pricing and firm
Figure 1 shows the average prices of electricity paid by three categories of users in India: households (domestic users), agricultural users,
5 FAQs about India cost-effective outdoor power supply price
Do industrial users pay more for electricity in India?
Moreover, although the cost to power utilities of supplying electricity to industrial users is typically lower than that of other users, the prices paid by industrial users in India have consistently been above the average cost of electricity supply.
Who pays the average electricity prices in India?
Figure 1 shows the average prices of electricity paid by three categories of users in India: households (domestic users), agricultural users, and industrial users. The prices paid by industrial users have consistently been higher than those paid by domestic and agricultural users.
Why do electricity prices fluctuate across states in India?
Since electricity generation in India is primarily via coal-fired thermal plants, the historical prevalence of coal-fired plants in a state together with changes in the price of coal provide variation across states and over time in electricity prices.
Why do industrial users pay lower electricity prices than other users?
In contrast, in most developed countries, industrial users typically pay lower prices for electricity compared to other users because the cost to power utilities of supplying electricity to industrial users tends to be lower than that of other users due to their ability to receive electricity at higher voltages and in bulk.
Why are electricity prices so high in developing countries?
Firms in developing countries tend to face relatively high prices for electricity as a result of cross-subsidisation systems whereby firms subsidise prices for other users. In a recent paper (Abeberese 2017), I explore the implications of these high electricity prices for firms.
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