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

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

Resumé

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.
OriginalsprogEngelsk
TidsskriftEnergy Economics
Vol/bind30
Udgave nummer3
Sider (fra-til)1246-1262
ISSN0140-9883
StatusUdgivet - 2008

Fingeraftryk

Electricity
Surveying
Choice modelling
Quality attributes

Citer dette

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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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A choice modelling analysis on the similarity between distribution utilities’ and industrial customers’ price and quality preferences. / Söderberg, Magnus.

I: Energy Economics, Bind 30, Nr. 3, 2008, s. 1246-1262.

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

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