Average residential outage cost estimates for the lower 48 states in the US

C.K. Woo, A. Tishler, Jay Zarnikau () and Y. Chen

Energy Economics, 2021, vol. 98, issue C

Abstract: Motivated by diverse residential electricity outage cost estimates and possible hypothetical bias of contingent valuation (CV) survey data, this paper proposes a simple formula for market-based estimation of residential outage costs. Its key finding is that average residential outage cost estimates for the lower 48 states of the US range from US$0.12 to US$0.34 per kWh unserved, below the regional CV-based estimates of US$1.0 to US$4.2 per kWh unserved found by a national study. It makes three contributions to the literature of residential outage cost estimation. First, it obviates collecting and analysing CV survey data for estimating average residential outage costs. Second, its proposed formula has minimal data requirements and is applicable to any city, state, region, or country. Finally, it details the policy implications of our newly found empirics in electricity pricing, resource planning, resource procurement, electricity product differentiation, and performance-based regulation of electricity reliability.

Keywords: Residential electricity outage cost; Market-based estimation; US$ per kWh unserved; Simple formula; USA (search for similar items in EconPapers)
JEL-codes: D12 Q41 Q48 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:98:y:2021:i:c:s0140988321001754

DOI: 10.1016/j.eneco.2021.105270

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