# **1. Introduction**

The purpose of this paper is to survey prevailing electricity price levels and tariff structures as a reference for practitioners to benchmark tariff design across countries. The paper also provides simple indicators of the performance of tariff designs against standard design criteria such as cost recovery and affordability and investigates the extent to which tariff structures apply price differentiation across customer groups and consumption categories. The paper also considers to what extent prevailing electricity tariff designs are compatible with emerging technological trends in the sector, such as distributed generation, demand-side participation, and electrification of transport.

The paper adds to a sporadic existing literature surveying electricity tariff designs across countries and evaluating their performance against standard criteria such as cost-recovery and affordability. These range from regional studies involving Sub-Saharan African countries (Briceño‐Garmendia and Shkaratan, 2011; The African Development Bank Group, 2019) to global surveys spanning both developed and developing countries (World Bank, 1990; Foster and Yepes, 2006). Existing studies find systematic patterns in electricity tariff design across countries. Ore et al., 2017 show that countries in Central America commonly differentiate volumetric tariffs across customer groups. Komives et al., 2005 show that rising block tariffs are widely used for residential customers often as a form of social tariff, but that they are not very effective at reaching poor households since electricity consumption is not a very strong proxy for household income.

A recurrent finding in the literature is the difficulty that low-income countries face in achieving cost recovery; even for operating costs (Huenteler et al., 2020). For instance, Briceño‐Garmendia and Shkaratan, 2011 find that while about 80 percent of African power utilities achieved operating cost recovery, only 30 percent achieved full capital cost recovery. Later work by Trimble et al., 2016 finds that even the share of African power utilities reaching operating cost recovery had fallen to about 50 percent, while barely 5 percent attained full capital cost recovery. Furthermore, there are evident tensions between the achievement of cost-recovery and affordability in the design of electricity tariffs, particularly for lower income countries, notably in Latin America and to an even greater degree in Sub-Saharan Africa and South Asia (Foster and Yepes, 2006).

Finally, a new strand emerging in the literature explores to what extent prevalent electricity pricing structures are compatible with the adoption of new technologies, including rooftop solar and electric vehicles. The main finding to date is that widely practiced increasing block tariff structures for electricity may have the unintended effect of over-incentivizing adoption of rooftop solar while under-incentivizing uptake of electric vehicles, relative to the economic optimum (McRae and Wolak, 2019). This illustrates that in a world where consumers are no longer passive, the behavioral implications of electricity tariff design are becoming increasingly critical.

Compared to earlier studies, which focus primarily on design of residential electricity tariffs, this paper takes a more comprehensive look at charging practices across the full gamut of customer categories (including residential, industrial, agricultural and public sector). It also goes beyond volumetric tariffs, to consider the full range of load-based and Time-of-Use pricing practices. As a result, the paper is able not only to make the typical assessments of cost recovery and affordability, but also to comment on the prevalence of pricing practices that support the adoption of new technologies in the power sector.

The remainder of the paper is organized as follows. Section 2 outlines the methodology. Section 3 presents results on the average level of electricity tariffs that are being charged in different countries to different customer groups and analyzes the pattern of cross-country variations. Section 4 looks more deeply at the design of tariff structures, whether they are based on volumetric drivers, load or time-of use. Section 5 2