Designation and influence of household increasing block electricity tariffs in China

Electricity is the guarantee of normal life, and the electricity price is widely concerned. As a developing country in the transition stage, abundant policy implications are included in the electricity price in China, thus, whether to adjust the resident electricity price is a dilemma for the government. However, the current single tariff system cannot cope with the complex social and environmental problems. A new price mechanism is indeed needed. This paper tries to design an increasing block tariffs system with the consideration of residential income and electricity consumption. The result indicates that the increasing block tariffs system with four‐tier structure is more reasonable for China. Although the increasing block tariffs will result in the increase of electricity price, it is still acceptable and affordable. The increasing block tariffs will greatly improve the equity and efficiency, and promote the electricity saving and emissions reduction. Moreover, the power companies will increase tariffs revenue, which would use to the transmission networks investment in poor area. In order to the offset the limitations of the increasing block tariffs, the government should adopt some complementary measures.