Households' Perceived Value of Electrical Service Reliability: An Analysis of Contingent Valuation Data
The Energy Journal, 1988
Posted: 19 Nov 2008
Date Written: 1988
Energy analysts are often faced with the need to determine the value of electric service reliability in the absence of an explicit market for this service feature. One method for indirectly measuring consumers' valuation is called "contingent valuation" (CV). In service reliability applications, this approach involves the use of customer surveys in which respondents are asked hypothetical questions about how much they would be willing to pay (WTP) to avoid a power outage, or conversely, how much ompensation they would be willing to accept (WTA) to incur an additional outage. Typical outage conditions are defined by such attributes as frequency, season and time-of-day of occurrence, and duration, important aspects that directly influence resource planning and ratemaking.
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