The welfare consequences of tariff rebalancing in the domestic gas market

The effects of tariff rebalancing on welfare is examined in the UK natural gas market. An econometric model of the household consumption is proposed. Tariff rebalancing between fixed and variable charges is found to highly impact distribution. Substitute methods are suggested to handle these effects: the use of the current welfare system as a mitigating factor, and the use of special tariffs for low-income consumers.