Electricity supplier choice and the wtp for service attributessome evidence from Spain

  1. Amador Morera, Francisco Javier
  2. González Marrero, Rosa Marina
  3. Ramos Real, Francisco Javier
XIX Encuentro de Economía Pública: Políticas Públicas para la salida de la crisis

Publisher: Universidad de Santiago de Compostela

ISBN: 978-84-695-1574-7

Year of publication: 2012

Pages: 57

Congress: Encuentro de Economía Pública (19. 2012. Santiago de Compostela)

Type: Conference paper


Recently Spain�s electrical industry started to transition from a traditional regulatory regime to one that introduced competition in both generation and supply activities. However, as happened in other countries, there has been no significant development of the retail market for residential customers. At the same time, initiatives, like the EU�s 20-20-20 plan, have led many countries, including Spain, to establish as one of their main goals that of increasing the share of renewable energies in energy consumption so as to reduce greenhouse gas (GHG) emissions. These facts explain that characterizing the domestic customers� preferences with regard to the attributes of electricity supply is relevant in order to evaluate both the possibilities for attaining a greater degree of competitiveness in the retail market and to design more effective energy policies to reach those goals. In this study we analyze the preferences of consumers and their MWTP for certain attributes of the electricity supply. Specifically, an electricity supplier company stated preference choice experiment was conducted in the Canary Islands. The results show other electric suppliers could successfully enter the market even if these companies did not significantly improve the level of service provided by the current company and/or offer some complementary service. Moreover, we find that both customers who are more satisfied with the service of their current supplier and older people are more likely not to change company. On the other hand, regarding the estimated marginal willingness to pay (MWTP) we can highlight the following results. First, customers who has experienced more serious outages in the past tend to show a higher MWTP for reduce the outages frequency. Second, respondents with higher level of education, those who stated a great concern for the GHG emissions and those who report following some energy saving actions in their homes exhibit a higher MWTP for renewable energies. Finally, we conclude that educational and instructive campaigns that raise the public�s awareness of environmental issues and generate sustainable consumption habits could be effective policies to reach a higher share of renewable energies in the generation of electricity.