Economic cost of energy in Minas Gerais: impacts of tariff increases between 2011 and 2015

Abstract

The first half of 2015 was marked by significant increases in electricity prices as a result of problems of hydro generation and the consequent use of thermal generation in energy supply. In this context, this paper aims to study the economic impacts of changes in the electricity prices in Minas Gerais, identifying the role of price changes by category of consumption. To do this, we have used a computable general equilibrium model, specially tailored for this analysis. When analyzing the sectoral impact of energy prices, the results allow us to identify elements that can subsidize energy pricing policies in Minas Gerais. The results indicate that indirect effects of energy prices on the economy can be more harmful than the effects of the price increase on residential energy consumption. Thus, price adjustments toward the final consumption tend to be less negative than the energy price increases on productive sectors, especially in industry.