_Who spends the most on energy in absolute terms?_ In absolute terms, expenditure on gas and energy products is generally progressive across all locations. Average monthly household expenditures on gas, electricity and central heating, across quintiles and location are summarized in Appendix Table 1.<sup>12</sup> In absolute terms, richer households spend more on energy than poorer households. Central gas spending of households in large cities is not strongly regressive; consumption levels are more or less even across the first four quintiles. As for LPG, poorer households generally spend a little more than richer households. This is not surprising, given the relatively lower central gas connection rates among poorer households; LPG thus serves to some extent as substitute to central gas.

Expenditure levels in absolute terms vary across energy products and across geographical locations. Rural households appear to have the highest expenditures on central gas and lowest on electricity, while the opposite is true for large cities. This primarily reflects housing peculiarities of urban and rural households, with central gas being used typically for cooking (and very rarely for heating dwellings) in large cities but for both cooking and heating in rural areas where it is available.

_What are the expenditure shares of energy?_ Electricity expenditures are more burdensome for poorer households and account for a larger share of household expenditure than all other gas and energy products combined. Since payment capability varies substantially across Moldovan population, it is critical to look at distributional impacts of potential tariff changes in relative terms. Taking all households together—where both unconnected households as well as households that are connected but have missing expenditure data are assumed to have _zero_ expenditures on energy—electricity expenditures account for almost 5 percent of household budgets, on average, while other gas and energy products account for 0.5 to 1.8 percent of budgets (Table 4, Item A). Spending on electricity is somewhat regressive: the poorest quintile spends 5.4 percent of their budget on electricity while the richest quintile spends only 3.6 percent – which indicates relatively inelastic demand for basic electricity uses such as lighting. In contrast, the richest quintile spend a larger share of their budget on central heat (1.8) compared to the lowest quintile (0.1). The expenditure patterns for central gas and LPG, on the other hand, are neither clearly regressive nor progressive when looking across all households across all locations together.

> 12 Two pieces of information drawn from the 2004 HBS allow us to calculate the average monthly expenditures on gas and energy. The first is the reported magnitude of expenditure. The second is the reference period for the reported expenditures. The second piece of information is drawn from a new survey question introduced in the 2004 HBS. Seasonality of consumption presents one methodological challenge, particularly in the case of central heating.  The HBS data reports expenditures on central heating year-round.  This may reflect the design of the billing cycle which allows for expenditure to be spread over the entire year.  The estimates reported in this note, therefore, are based on the assumption that the observed expenditures on central heating do, in fact, reflect actual spending patterns.

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