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http://dx.doi.org/10.5855/ENERGY.2013.22.2.141

Households' willingness to pay for the residential electricity use  

Lim, Seul-Ye (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology)
Kim, Ho-Young (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology)
Yoo, Seung-Hoon (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology)
Publication Information
Journal of Energy Engineering / v.22, no.2, 2013 , pp. 141-147 More about this Journal
Abstract
Electricity is a basis for human existence. This paper attempts to analyze the households' willingness to pay (WTP) for the residential electricity use. The WTP for the residential electricity use can be defined as the sum of actual price of and additional WTP for it. The former is easily observed in the market, but the second is not observed and thus should be obtained through a WTP survey of households. To this end, this study conducted a survey of randomly selected 1,000 households in Korea in November 2010. The results indicate that the mean additional WTP for the residential electricity use was estimated to be KRW 11.24 per kWh. Given that the average price of residential electricity was KRW 98.07 per kWh at the time of the survey, the economic benefit from the residential electricity use was computed as KRW 109.31 per kWh. This information can be compared with the cost involved in the supply of one kWh of residential electricity.
Keywords
willingness to pay; residential electricity; economic benefit; average price;
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