Tariffs, Enforcement, and Electricity Default: Evidence from Billing Data

This paper investigates the key factors that influence electricity bill default rates among residential consumers in Brazil. We utilize a unique dataset of monthly electricity bills, which we combine with various administrative data sources. By examining the differences in electricity price increases and enforcement policies across different states and time periods, we identify their effects on default rates. Our findings indicate that an increase in electricity tariffs raises the likelihood of default. Additionally, we discover that power cuts are the most effective measure to encourage repayment, reducing the default duration (time until all outstanding balances are settled) by up to 9 percent. These results enhance our understanding of the factors affecting household default behavior and highlight their implications for ensuring electricity affordability. JEL Classification: G50 - Household Finance: General; L94 - Electric Utilities; L51 - Economics of Regulation