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Demand adjustment in Hungarian natural gas consumption: effect of punitive block tariffs?
Peter Kotek  1@  , Gábor Horváth  1@  , Gabriella Szajkó  1@  , Borbála Takácsné Tóth  1@  
1 : Regional Centre for Energy Policy Research

We provide a detailed analysis of the block pricing in household natural gas end-user prices in Hungary. Following a decade of fixed end-user prices, the new block tariffs introduced a second-tier rate in 2022 that was seven times higher than the first tier. We quantify the effects of the price regulation by separating the temperature and workday effects. We have estimated the weather and price effects with 268 unique regressions for each distribution exit point of the natural gas transmission system. Our first model quantifies the expected gas demand for each exit point based on the period prior to the introduction of the block tariff. Our results indicate that gas consumption decreased by 16% due to the change in regulation. In another estimation, we introduce end-user price as an independent variable and quantify the own-price elasticity of natural gas demand at -0.3. We argue that the block tariff has considerably decreased the energy consumption of households. Our results can be further utilised in designing policies such as carbon pricing for the household sector to affect fossil fuel use.


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