The value of continuous power supply for Flemish households

This paper estimates the willingness to pay/accept (WTP/WTA) of Flemish households for continuous power supply, based on a stated preference approach. The data were collected via a choice experiment and were then used to estimate a main effects conditional logit model and a random parameter logit model with interaction effects and correlated preferences. Power outages are characterized by 6 attributes: annual frequency, duration, peak or off peak, announced or unannounced, winter or summer and invoice impact. All estimates have the expected sign. The results are used to assess the marginal WTP/WTA for each of these attributes. Overall, the outcome suggests that Flemish households have heterogeneous preferences regarding power outage attributes, and that, due to a status quo bias, only a relatively small share of them is willing to switch to a lower reliability level if this would be compensated by a bill discount.

► Choice experiment data is collected for the Flemish residential sector.
► A main effects conditional logit and random parameter logit model are estimated.
► Households have heterogeneous preferences regarding all power outage attributes.
► WTA values for reduced reliability levels are calculated.
► Only small share of households is willing to switch due to status quo bias.