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A choice modelling analysis on the similarity between distribution utilities' and industrial customers' price and quality preferences

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  • Söderberg, Magnus

Abstract

The Swedish Electricity Act states that electricity distribution must comply with both price and quality requirements. In order to maintain efficient regulation it is necessary to firstly, define quality attributes and secondly, determine a customer's priorities concerning price and quality attributes. If distribution utilities gain an understanding of customer preferences and incentives for reporting them, the regulator can save a lot of time by surveying them rather than their customers. This study applies a choice modelling methodology where utilities and industrial customers are asked to evaluate the same twelve choice situations in which price and four specific quality attributes are varied. The preferences expressed by the utilities, and estimated by a random parameter logit, correspond quite well with the preferences expressed by the largest industrial customers. The preferences expressed by the utilities are reasonably homogenous in relation to forms of association (private limited, public and trading partnership). If the regulator acts according to the preferences expressed by the utilities, smaller industrial customers will have to pay for quality they have not asked for.

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  • Söderberg, Magnus, 2008. "A choice modelling analysis on the similarity between distribution utilities' and industrial customers' price and quality preferences," Energy Economics, Elsevier, vol. 30(3), pages 1246-1262, May.
    • Handle: RePEc:eee:eneeco:v:30:y:2008:i:3:p:1246-1262
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    2. Xie, Li & Kong, Chun, 2024. "Electricity user connection pricing strategy: The incomplete contract theory perspective," Energy Economics, Elsevier, vol. 132(C).
    3. Ovaere, Marten, 2023. "Cost-efficiency and quality regulation of energy network utilities," Energy Economics, Elsevier, vol. 120(C).
    4. Tianlei Zang & Yueping Xiang & Jianwei Yang, 2017. "The Tripartite Game Model for Electricity Pricing in Consideration of the Power Quality," Energies, MDPI, vol. 10(12), pages 1-27, December.
    5. Taro Ohdoko & Satoru Komatsu & Shinji Kaneko, 2013. "Residential preferences for stable electricity supply and a reduction in air pollution risk: a benefit transfer study using choice modeling in China," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(3), pages 309-328, July.
    6. Niclas Berggren, 2012. "The Calculus of Consent: some Swedish connections," Public Choice, Springer, vol. 152(3), pages 313-321, September.

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