An Empirical Study To Evaluate Public Willingness To Pay Maximum Demand Charge In Malaysia
Malaysian Electricity Supply Industry (MESI) is aiming to sustain its operation by ensuring long-term electricity system security and supply quality. In order to achieve this, all customers have to pay a fair share on the cost of generating electricity. This cost includes maximum demand (MD) char...
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| Format: | Thesis |
| Language: | en_US |
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| Summary: | Malaysian Electricity Supply Industry (MESI) is aiming to sustain its operation by
ensuring long-term electricity system security and supply quality. In order to achieve
this, all customers have to pay a fair share on the cost of generating electricity. This
cost includes maximum demand (MD) charge. The MD is a peak load consumed by
the customer at any point of time. Currently, the MD charge is only being imposed on
commercial and industrial customers. However, based on the load being placed on the
electric grid, the MD charge should be paid by all electricity customers including the
domestic customers. It is the purpose of this study to investigate if the MD charge
eventually needs to be paid, how willing are the public to pay cost-reflective energy
pricing with an addition of MD charge in their electricity bill. Hence, this study aims
to evaluate the relationship between determinants such as understanding of electricity
bill (UEB), understanding of electricity pricing (UEP) and awareness on amount
electricity consumption (AAEC) on the public willingness to pay (WTP) on MD
charges. Socio-economic characteristics and affordability that related to the public
WTP on MD charge are also described in this study. This evaluation is using a
proposed theoretical framework and econometric analysis. The three determinants are
comprised of 20 items and a questionnaire of 5-point Likert scale is developed. This
study is based on the quantitative method by conducting a survey on randomly
selected respondents in Peninsular Malaysia. Out of 465 sets of questionnaires that
have been distributed through Convenience Sampling method, 420 sets are returned,
and 9 sets are excluded. Thus, the total of 41 1 sets is deemed adequate for this study.
The results from the exploratory factor analysis (EFA) finds the scales in a
questionnaire on public willingness to pay MD charge have appropriate and adequate
construct validity. Hence, the questionnaire can be used as the measurement
instruments in obtaining the data from the target respondents in this study. The study
developed six hypotheses that are used to validate the relationship between public
WTP on MD charge and its determinants. Their relationships are analysed using
STATA version 13.0 and ordered probit model is used to measure the variables. The
finding from this study indicates that UEB, UEP, and AAEC are the main
determinants that are significantly influenced the public WTP on MD charge. |
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