Valuing Electricity Service Attributes: A Choice Experiment Study in Madhya Pradesh, India

31 Pages Posted: 27 Nov 2012

See all articles by Herath M. Gunatilake

Herath M. Gunatilake

University of Peradeniya; Asian Development Bank

Sumeet Patil

University of California, Berkeley

Jui-Chen Yang

RTI International

Date Written: November 2012

Abstract

This paper presents the results of a choice experiment study undertaken to value electricity service attributes in Madhya Pradesh, India. Primary data was collected from 2,083 households using stratified random sampling method. Results show that existing service is very poor and consumers have substantial willingness to pay (WTP) for changing the status quo. Amongs the studied service attributes, hours of supply captures the highest WTP and WTP declines significantly with reduced hours of supply. However, quality, customer service, and accuracy of billing together accounts for 56% of the total WTP. Assessment of WTP with different service attribute combinations show that value of other service attributes become relatively more important when supply is less than 24 hours. Simulations show that uptake rates increase substantially when improved hours of supply is supplemented with other service attributes. Development impact of $1.2 billion worth physical infrastructure investments on Madhya Pradesh power distribution network for 24-hour supply can be significantly enhanced if quality, customer service, transparency, and accuracy of billing are also improved simultaneously.

Keywords: Unbundling Demand, Value of Electricity Service Attributes, India

JEL Classification: Q40, Q51, C93

Suggested Citation

Gunatilake, Herath M. and Patil, Sumeet and Yang, Jui-Chen, Valuing Electricity Service Attributes: A Choice Experiment Study in Madhya Pradesh, India (November 2012). Asian Development Bank Economics Working Paper Series No. 316, Available at SSRN: https://ssrn.com/abstract=2181225 or http://dx.doi.org/10.2139/ssrn.2181225

Herath M. Gunatilake (Contact Author)

University of Peradeniya

Peradeniya
Sri Lanka

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Sumeet Patil

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Jui-Chen Yang

RTI International ( email )

3040 Cornwallis Road
RTP, NC 27709
United States

HOME PAGE: http://www.rti.org

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