Assessing the effect of increasing block tariffs for residential natural gas in Hefei City, China

An increasing block tariff (IBT) policy for residential natural gas has been implemented in all Chinese cities with gas supply since January 2016 to guide residents to reduce gas. Due to the different local climate and demographic characteristics of China's regions, the IBT is not uniform, which provides an opportunity to evaluate the energy-saving effect of IBTs. This paper takes Hefei City as an example, based on a bimonthly bill dataset of Hefei residents from January 2014 to October 2018 and a difference-in-difference (DID) experiment designed within a regression discontinuity design (RDD) framework. The results show that the current IBT has a significant energy-saving effect, especially for households falling within the third price block, but not for households near the price-block thresholds. Further heterogeneity analyses show higher treatment effects for wall-mounted boiler heating users than non-wall-mounted boiler heating users and during the heating season than the non-heating season. These results suggest that the government should optimize the IBT from three to four blocks and develop separate rates for different users and seasons.