Demand of the Population on Heat and Electricity Markets of the Russian Far East: limitations and consequences

Abstract

The paper examines the specifics of organization of the electricity and heat energy markets depending on the population behavior in the Far East. The region maintains a regular monopoly, where vertically integrated companies provide services while keeping surplus supply; consumer has no ability to influence the demand in the conditions of imposed prices. The paper estimated the price elasticity of demand on electricity for the population of Khabarovsk Krai, which confirmed the low degree of dependency of consumption from either income or the scale of the tariff. Furthermore, the paper estimated the potential growth of population expenses on electricity in two scenarios: 1) keeping energy tariffs on inflation level and 2) keeping current average annual growth rates of tariffs. There is a differentiation of availability of services depending on the level of income. There is also a need for social support of population from budgets depending on the growth rates of tariffs on electricity and heat energy.