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The setting of public utility prices involves balancing various competing government policy objectives, from equity concerns to ensuring the financial sustainability of providers and balancing public finances. In practice, public utility pricing often departs significantly from government objectives and tends to be characterized by unnecessarily complex price schedules, below cost-recovery tariff rates, and sectoral inefficiencies that contribute to large fiscal costs. Countries commonly embark on utility pricing reform in response to these heavy fiscal pressures. The paper discusses various reform options available to governments, with a focus on residential pricing schedules, highlighting their fiscal, financial, redistributive, and efficiency implications.

Macroeconomics --- Economics: General --- Taxation --- Investments: Energy --- Efficiency --- Optimal Taxation --- Taxation and Subsidies: Externalities --- Redistributive Effects --- Environmental Taxes and Subsidies --- National Government Expenditures and Related Policies: Infrastructures --- Other Public Investment and Capital Stock --- Electric Utilities --- Energy: Demand and Supply --- Prices --- Trade Policy --- International Trade Organizations --- Macroeconomics: Consumption --- Saving --- Wealth --- Urban, Rural, and Regional Economics: Household Analysis: General --- Aggregate Factor Income Distribution --- Economic & financial crises & disasters --- Economics of specific sectors --- Public finance & taxation --- Investment & securities --- Tariffs --- Taxes --- Consumption --- National accounts --- Electricity --- Commodities --- Household consumption --- Income --- Currency crises --- Informal sector --- Economics --- Tariff --- Electric utilities

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The surge in energy and food prices, which was amplified by Russia’s invasion of Ukraine, has prompted a flurry of policy responses by countries during 2022. The aim of these policy responses was to mitigate social and economic impact of higher prices. In this paper we document announcements of policy measures based on the Database of Energy and Food Price Actions (DEFPA), which was developed based on two rounds of survey responses of IMF country teams conducted in March/April and June/July of 2022. The paper also provides discussion on policy trade-offs when considering appropriate policy responses both for countries with strong and weak social safety nets. Key policy message is that providing targeted support to households in the form of cash transfers is the most cost-effective way of alleviating the burden on vulnerable households and have to be preferred over broad-based mechanisms that prevent international prices to pass through to domestic consumers.

Macroeconomics --- Economics: General --- Taxation and Subsidies: Externalities --- Redistributive Effects --- Environmental Taxes and Subsidies --- Fiscal Policies and Behavior of Economic Agents: Household --- Fiscal Policies and Behavior of Economic Agents: Firm --- Price Level --- Inflation --- Deflation --- Energy: Demand and Supply --- Prices --- Agriculture: Aggregate Supply and Demand Analysis --- Economic & financial crises & disasters --- Economics of specific sectors --- Energy prices --- Food prices --- Currency crises --- Informal sector --- Economics --- France