THE TARGET EFFICIENCY OF LIFELINE ELECTRICITY PRICING AND OTHER ENERGY SUBSIDY PROGRAMS: A SURVEY-BASED POLICY ANALYSIS (DISTRICT OF COLUMBIA, UTILITY ECONOMICS, RATEMAKING, D.C. PUBLIC SERVICE COMMISSION, LIHEAP (LOW INCOME HOME ENERGY ASSISTANCE PROGRAM))

This dissertation evaluates three types of subsidy programs designed to aid low-income residential electricity customers. The three programs are a "lifeline" rate system, which extends a "lifeline" of 450 KWH per month of low-cost electricity to consumers for essential uses; a payments to suppliers program; and a price discount program. Using a telephone survey of nine hundred District of Columbia residents, the study employs a path analysis, calculations of income elasticities, and estimates of the number of poor and non-poor customers consuming above and below the lifeline breakpoint to evaluate the horizontal and vertical equity of the three programs. The path analysis utilizes twelve independent variables: appliance stock; insulation quality; conservation attitude; physical size of dwelling; number of persons home during the day; household size; age, sex, race, and education of billpayer; home ownership; and annual household income. The dependent variable is annual KWH consumption. The path analysis shows that the direct effect of income on KWH consumption is 0.225 (standardized beta weight), and the indirect effect is 0.105. The indirect effect is largely composed of causal paths from income to usage via appliance stock and physical size of dwelling. Rating the three programs in terms of vertical and horizontal equity shows that all programs have substantial drawbacks. Recommendations include the abolition of the lifeline and price discount programs, the alteration of the payments to suppliers program to include more program eligibles, and the changing of the payments to suppliers program into a direct cash grant program. The implications of the study for larger issues--such as the effect of consumer advocates on utility commission agenda setting and policy outputs, and the prospects for substantial deregulation--are also discussed.