Throughout the world, companies that supply essential and regulatory services extend different types of assistance to poor populations to allow them affordable access to electricity, gas, and water. Increasing block tariffs (IBT) are commonly used for this purpose in some OECD countries: Greece, Japan, Italy, Portugal, Spain, South Korea, Turkey, Belgium, and Luxembourg. In recent years, a growing number of water, electricity, and gas suppliers in the U.S. and other locations have instituted IBT.
Israel is paving the way in the use of increasing block tariffs. The pricing structure for water use in Israel is based on two types of targeting to guarantee that poor families are charged a lower rate for domestic water use. One type of targeting is quantity-based, so that families with low water consumption pay a low rate for domestic use. The other type, quality-based, is determined by family size—large families are eligible for an additional quantity of water at a low rate. The latter code is not applied automatically; each household must take steps to apply for reduced rates based on family size.
The aim of our research is to provide information about the effectiveness of programs designed to assist vulnerable populations (quantity-based and quality-based coding). This information can help decision-makers in establishing an appropriate pricing structure for essential services (such as water for domestic use, electricity, gas, and telephone communications) and in designing programs for assisting vulnerable populations.