Heat Tariff Reform and Social Impact Mitigation : Recommendations for a Sustainable District Heating Sector in Belarus

The Government of the Republic of Belarus (GoB) plans to increase district heating (DH) tariffs to cost-recovery levels and gradually phase out subsidies, replacing them with social assistance programs. Residential DH tariffs in Belarus are currently at roughly 10-21 percent of cost-recovery levels. DH subsidies are highly regressive, add costs to business, and create significant fiscal risks and macroeconomic vulnerabilities. The purpose of this report is to analyze the social, sectoral, and fiscal impacts of the proposed tariff reform, and to identify and recommend measures to mitigate adverse impacts of DH tariff increases on the households. The analysis shows that: 1) the burden of higher DH tariffs will fall most heavily on low-income groups; 2) the current system of subsidies is unfair, benefitting wealthy customers more than the poor; 3) cross-subsidies undermine the competitiveness of industries in Belarus; and underpriced residential heat places an increasing fiscal burden on the GoB and risks macroeconomic instability. The analysis shows that a negative social impact is manageable if a tariff increase is accompanied by countervailing measures to compensate for the loss of purchasing power, in particular of the poor, through targeted social assistance and energy efficiency programs. The rest of the report is organized as follows: Section 1 describes the GoB's plans for the sector. Section 2 analyzes the principal challenges in the sector that necessitate tariff reform. Section 3 discusses tariff reform options and the likely impact of pursuing each of these options. Section 4 concludes by recommending a reform action package that includes customer communication and engagement, social protection measures and investments in energy efficiency. The appendices contain material supporting the analysis in each section.

Bibliographic Details

Main Author:	World Bank
Format:	Energy Study biblioteca
Language:	English en_US
Published:	Washington, DC 2014-06
Subjects:	ADMINISTRATIVE ASSISTANCE, ADVERSE IMPACT, ADVERSE IMPACTS, AFFORDABILITY, ALTERNATIVE FUELS, APPROACH, ARREARS, BENCHMARKS, BENEFIT PAYMENTS, BIOMASS, BOILER, BOILERS, BORDER PRICES, BORROWING, CAPACITY BOILERS, CAPACITY FACTORS, CAPITAL EXPENDITURE, CAPITAL INVESTMENT, CASH TRANSFERS, CC, COAL, COMMERCIAL ELECTRICITY, COMPETITIVENESS, CONSUMER GOODS, CONSUMER GROUPS, CONSUMPTION LEVELS, COST OF HEAT, COST OF SERVICE, COST RECOVERY, COSTS OF HEAT PRODUCTION, CROSS-SUBSIDIES, CS, CUSTOMER BASE, DEVELOPMENT BANKS, DISTRIBUTION LOSSES, DISTRICT HEATING, ECONOMIC ANALYSIS, ECONOMIC PERFORMANCE, ECONOMIES OF SCALE, EFFICIENCY IMPROVEMENT, EFFICIENCY INVESTMENTS, ELECTRICITY, ELECTRICITY CONSUMERS, ELECTRICITY PRICES, ELECTRICITY SALES, ELECTRICITY SERVICES, ELECTRICITY TARIFF, ELECTRICITY TARIFFS, ELIGIBILITY CRITERIA, EMPLOYMENT, EMPLOYMENT OPPORTUNITIES, ENERGY BALANCE, ENERGY BILLS, ENERGY CONSUMPTION, ENERGY COSTS, ENERGY EFFICIENCY, ENERGY MIX, ENERGY RESOURCES, ENERGY SAVINGS, ENERGY SOURCES, ENERGY USAGE, EXCLUSION, EXPENDITURE, EXPENDITURES, EXPORTS, FAMILIES, FINANCIAL BURDEN, FINANCIAL SUPPORT, FINANCING ARRANGEMENTS, FOREIGN TRADE, FUEL, FUEL USE, FUELS, GAS BOILERS, GAS PRICE, GAS PRICES, GDP, GENDER, GENDER DIFFERENCES, HEAT, HEAT ENERGY, HEAT ENERGY CONSUMPTION, HEAT GENERATION, HEAT METERING, HEAT PRODUCTION, HEAT SALES, HEAT SUPPLY, HEAT TARIFF, HEAT TARIFFS, HEATING SYSTEMS, HOT WATER, HOT WATER BOILERS, HOUSEHOLD CONSUMPTION, HOUSEHOLD INCOME, HOUSEHOLDS, IMPLICIT TAX, IMPROVEMENTS IN ENERGY EFFICIENCY, INCENTIVES FOR ENERGY EFFICIENCY, INCOME GROUP, INCOME GROUPS, INCOME LEVELS, INCOMES, INDIVIDUAL ENTREPRENEURS, INEFFICIENCY, INVESTMENT IN ENERGY EFFICIENCY, INVESTMENTS IN ENERGY, LACK OF INFORMATION, LACK OF KNOWLEDGE,
Online Access:	http://documents.worldbank.org/curated/en/2014/06/19890076/heat-tariff-reform-social-impact-mitigation-recommendations-sustainable-district-heating-sector-belarus http://hdl.handle.net/10986/20021
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