World Bank2012-12-052012-12-052012-06https://hdl.handle.net/10986/11910The cost of energy in Eastern Europe and Central Asia, as elsewhere, is an important policy issue, as shown by the concerns for energy affordability during the past harsh winter. Governments try to moderate the burden of energy expenditures that is experienced by households through subsidies to the energy providers, so that households pay tariffs below the cost recovery level for the energy they use. These subsidies result in significant pressures on government budgets when international prices rise. They also provide perverse incentives for the overconsumption of energy as households do not pay the true cost of energy, and therefore, have fewer incentives to save or to invest in energy efficiency. Balancing competing claims-fiscal and environmental concerns which would push for raising energy tariffs on the one hand and affordability and political economy concerns which push for keeping tariffs artificially low on the other-is a task that policy makers in the region are increasingly unable to put off. Addressing this issue is all the more pressing as the ongoing crisis continues to add stress to government budgets, and that international energy prices remain high. This is the first report to assess, at the micro level for the whole region, the distributional impact of raising energy tariffs to cost recovery levels and to simulate policy options to cushion these impacts.en-USCC BY 3.0 IGOAFFORDABLE ENERGYALTERNATIVE ENERGYAVAILABILITYBALANCECARBONCARBON ECONOMYCARBON EMISSIONSCLIMATECOALCONSUMER SURPLUSCONSUMPTION PATTERNSCOST OF ENERGYCOST SAVINGSCOSTS OF ENERGY PRODUCTIONDEBTDEMAND FOR ENERGYDEMAND MANAGEMENTDISTRIBUTION OF ENERGYDISTRIBUTION OF GASDISTRICT HEATINGDRILLINGECONOMIC GROWTHELECTRIC APPLIANCESELECTRIC POWERELECTRICITYELECTRICITY CONSUMPTIONELECTRICITY PRICEELECTRICITY PRICESELECTRICITY PRODUCTIONELECTRICITY SECTORELECTRICITY TARIFFELECTRICITY TARIFFSEMISSIONSEMPIRICAL ANALYSISENERGY BILLSENERGY CONSUMPTIONENERGY COSTSENERGY DEMANDENERGY EFFICIENCYENERGY EFFICIENCY MEASURESENERGY EXPENDITUREENERGY EXPENDITURESENERGY GENERATIONENERGY INTENSITYENERGY MARKETSENERGY NEEDSENERGY POLICIESENERGY PRICEENERGY PRICESENERGY PRICINGENERGY PRODUCTSENERGY RESOURCESENERGY SOURCEENERGY SOURCESENERGY SUPPLYENERGY USAGEENERGY USEENVIRONMENTALENVIRONMENTAL COSTSENVIRONMENTAL IMPLICATIONSENVIRONMENTAL TAXENVIRONMENTSEXPENDITURESEXPLOITATIONFUELGAS CONSUMPTIONGAS PRICESGAS SECTORGROSS DOMESTIC PRODUCTHEATHIGHER ENERGY PRICESHOT WATERHOUSEHOLD ENERGYHOUSEHOLD SECTORHYDROPOWERIMPROVEMENTS IN ENERGY EFFICIENCYIMPROVING ENERGY EFFICIENCYINCOMEINVESTMENT IN ENERGY EFFICIENCYINVESTMENTS IN ENERGYLIQUEFIED NATURAL GASLIQUEFIED PETROLEUM GASLIVING STANDARDSMARKET PRICESMEMBER STATESNATURAL GASNATURAL MONOPOLIESOILOIL MARKETSOIL PRICESPERVERSE INCENTIVESPETROLEUMPETROLEUM GASPIPELINEPOLICY MAKERSPOLITICAL ECONOMYPOWERPOWER GENERATIONPOWER GENERATION CAPACITYPOWER SECTORPRESENT VALUEPRICE CHANGESPRICE OF ELECTRICITYPRICE OF GASPRIMARY ENERGYPRODUCTION COSTSPURCHASING POWERQUALITY OF ENERGYRENEWABLE SOURCESRESIDENTIAL ENERGYRETROFITTINGSOCIAL COSTSSPACE HEATINGSUSTAINABLE DEVELOPMENTTARIFF LEVELSTARIFF STRUCTURETARIFF STRUCTURESUTILITIESWELFARE LOSSWORLD OILWORLD OIL PRODUCTIONWorld Bank10.1596/11910