A contingent valuation model for assessing electricity demand

Abstract

PurposeThe purpose of this paper is to focus on households' willingness to pay for electricity consumption and mitigation expenditure due to poor electricity infrastructure as a measure of demand and tariff setting.Design/methodology/approachIn this paper, the demand side management (DSM) approach was adopted in establishing user demand for electricity in the study area.FindingsBased on the high cost (averting expenditure) of providing alternative power supply, households are willing to pay extra for more reliable and regular power supply.Practical implicationsThe study is a deviation from the usual command or supply side management approach to infrastructure provision and management.Originality/valueThere is limited research on DSM approach to electricity infrastructure provision in Nigeria. The study will enhance the chances of cost recovery under private‐public partnership arrangement. The paper identifies that a reliable and reasonable priced electricity supply is essential for a developing country.