Abstract
To address issues of non-payment, high costs, and theft, paying a fixed fee for electricity is common among many developing countries. We use a conjoint experiment to study electricity billing preferences among urban and rural communities in Uttar Pradesh, India. We find that 59.5% of respondents (95% CI: 58.2%–60.9%) prefer consumption-based tariffs as opposed to fixed fee ones, favoring lower base charges among a number of factors. We additionally use Bayesian Additive Regression Trees to test for heterogeneous treatment effects. Respondents with more appliances, using more hours of electricity, and who live in rural areas with meters prefer consumption-based plans with lower base rates. Our results suggest that policy reforms should move beyond fixed rate schemes especially if respondents would accept higher unit tariffs with improved service.
•In Uttar Pradesh, households prefer consumption-based tariffs as opposed to fixed fee ones.•Rural respondents with more appliances and higher electricity usage prefer consumption-based plans with lower base rates.•Liquidity constraints strongly affect billing and electricity preferences.•Policy should move away from fixed-rate schemes and address non-price factors.
