Kochnakyan, ArturBalabanyan, AniAntmann, PedroLaderchi, Caterina RuggeriOlivier, AnnePierce, LaurenHankinson, Denzel2014-01-292014-01-292013-06https://hdl.handle.net/10986/16703Armenia's energy sector has achieved a level of electricity reliability, service quality and efficiency of sector operations that stands out among countries participating in Commonwealth of Independent States (CIS). Much of this can be attributed to a decade of regulatory reform including a long-standing commitment to cost-recovery tariffs. The study is structured as follows: section one provides definitions of the key terms used and a background on the current tariff setting process in Armenia. Section two indicates how far tariffs have departed from cost-recovery levels and what costs have not been covered as a result. Section three describes how new investments will affect the average cost of service and the average residential tariff. Section four proposes a marginal cost-based tariff structure and explains why this differs from the current tariff structure. Section five discusses the poverty and social impact of tariff increases needed to cover new investments in 2021. Section six identifies options for subsidization and mitigating rate shock that will help transition to higher, marginal cost-based tariffs. Finally, section seven summarizes conclusions and recommendations of the analysis.en-USCC BY 3.0 IGOACCESS TO ELECTRICITYACCOUNTINGACCOUNTING STANDARDSADMINISTRATIVE COSTSALTERNATIVE ENERGYANNUAL REVENUE REQUIREMENTAPPROACHASSET VALUEAVAILABILITYAVERAGE COSTSAVERAGE TARIFFAVERAGE TARIFFSBALANCEBENEFICIARIESBIOMASSBIOMASS PLANTBLOCK TARIFFBLOCK TARIFFSBUDGETINGCAPACITY CONSTRAINTCAPITAL COSTSCAPITAL EXPENDITURECARBON EMISSIONSCASH TRANSFERCASH TRANSFERSCOLLECTION EFFICIENCYCONSUMER PRICE INDEXCONSUMERSCOST OF CAPITALCOST OF ELECTRICITYCOST OF SERVICECOST RECOVERYCOSTS OF ELECTRICITYCURRENCYCUSTOMER COSTSDEBTDEBT SERVICEDEMAND FOR WATERDEPRECIATION CHARGEDEPRECIATION RATEDISCOUNT RATESDISPOSABLE INCOMEDISTRIBUTION FACILITIESDISTRIBUTION MARGINDOMESTIC CONSUMPTIONDOMESTIC MARKETECONOMIC CRISISECONOMIC EFFICIENCYECONOMIC REGULATIONECONOMIC THEORYEFFICIENT ALLOCATIONELECTRICITYELECTRICITY CONSUMPTIONELECTRICITY GENERATIONELECTRICITY PRICEELECTRICITY SECTORELECTRICITY SUPPLYELECTRICITY TARIFFSENERGY AUDITENERGY BILLSENERGY COMPANIESENERGY CONSUMPTIONENERGY COSTSENERGY EFFICIENCYENERGY EXPENDITUREENERGY SOURCESENERGY USEEQUIPMENTEQUITY FINANCINGEXCESS CAPACITYEXCESS SUPPLYEXCHANGE RATEEXCHANGE RATESEXPENDITURESFINANCIAL CRISISFINANCIAL PERFORMANCEFINANCIAL SUSTAINABILITYFINANCIAL VIABILITYFISCAL BURDENFIXED ASSETSFIXED CHARGEFIXED COSTSFUELFUEL COSTFUEL COSTSFUEL STORAGEGASGAS PLANTGAS PLANTSGAS TURBINEGDPGENERATIONGENERATION CAPACITYGENERATION COSTSGENERATORSGOVERNMENT BUDGETGOVERNMENT FUNDSGOVERNMENT PLANSGOVERNMENT SUBSIDIESHEATHEAT DEMANDHOUSEHOLD CONSUMPTIONHOUSEHOLD INCOMEHYDROPOWERHYDROPOWER PLANTIMPLICIT SUBSIDYINCOME TAXINFLATIONINITIAL CONSUMPTION BLOCKINSTITUTIONAL CAPACITYINTERNATIONAL BANKINVESTMENT COSTSINVESTMENTS IN ENERGYKILOWATT HOURKILOWATT-HOURSLEVEL OF DEPRECIATIONLOAD MANAGEMENTLOANLOCAL DISTRIBUTIONLOW TARIFFLOWER TARIFFSWorld Bank10.1596/16703