Assessing the consumers' willingness to adopt a prepayment metering system in Nigeria

Despite the rising popularity in the adoption and usage of prepayment meters, little is still known about the drivers of its adoption. We examine the willingness to adopt prepayment metering (PPM) for a sample of Nigerian households that were not prepayment users. Double-hurdle models were estimated to account for households' decisions concerning billing system switching behaviour and households' willingness to pay (WTP). The estimated results revealed that decisions to adopt a prepayment meter are significantly affected by current electricity spending, current billing method and the split incentive problem. Whereas current electricity spending significantly increased the tendency to adopt PPM, the split incentive problem reduced the probability of adoption. Although unmetered consumers were more likely to express a willingness to adopt a PPM system than post-paid customers, they did not intend to pay a significantly higher amount to obtain the prepayment service. Income did not play a significant role in decision-making concerning PPM adoption and the corresponding WTP amount. These results cast doubt on the validity of the widely held belief that low income may be responsible for PPM adoption, reflecting the widespread usage of PPM by low-income households.