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Presentation by
Herath Gunatilake
Clean Energy Forum 8 June 2012
Introduction
1.2 Billion Investment on distribution improvement Electricity and well-being of households Matching service quality with consumer preferences Electricity is a composite commodity Unbundling the Demand Hours of supply Quality (voltage) Customer service Accuracy/transparency of billing Values of the service attribute Development Impacts
Methods
Stated vs Revealed Preference methods Unbundling Stated Preference Method Choice Experiments:
Attribute and levels Experimental design Questionnaire development Sampling Econometric modeling
1) Hours of Supply
(i) 24 hours
(ii) 18 hours: 5 am to 11 pm (iii) 12 hours: 5 am 12 noon and 6pm 11 pm (iv) 8 hours irregular
2) Quality of Supply
3) Customer Service
(i) A dedicated customer service (ii) Continue to get the same level of customer service
4) Billing
(i) Easy to read, understand and accurate bill regularly each month. (ii) Continue with current billing system
Econometric Model
bill echr24 echr18 echr12 ecquality ecservice ecbilling optout echr24ecquality echr24ecservice echr24ecbilling
= = = = = = = = = = =
monthly bill amount offered for the scheme; effect codes for 24 hours supply effect codes for 18 hours supply effect codes for 12 hours supply effect codes for good quality / voltage of supply effect codes for good customer service effect codes for accurate and easy billing 1 if respondent does not choose any of the schemes interaction term between echr24 and equality; interaction term between echr24 and ecservice; and interaction term between echr24 and ecbilling;
Coefficient
-0.015** 0.884** 0.042 -0.177** 0.419**
Standard Error
0.001 0.043 0.040 0.042 0.025
WTP
106 52 37 55 37
Cust. Service
Accurate Billing Optout Hr24-quality Hr24-service Hr24-billing
0.286**
0.343** -1.802** -0.005 0.059 0.009
0.023
0.025 0.079 0.041 0.042 0.045
0.00
0.00 0.00 0.91 0.17 0.84
45
-1 8 1 251
Total WTP
24-Hours Supply
12-Hours Supply
Predicted Uptake (%) by Income for Different Levels of Service Provision with Block Tariff
Conclusions
Hours of supply captures the highest value Other attributes together contribute 56% to the WTP Other Attributes are more important when hours of supply is less than 24 Uptake rate increase significantly when every aspect of service improves simultaneously Understanding consumer preference and aligning the service accordingly is necessary to enhance development impacts
Thank You.