MEASUREMENT OF ELECTRICITY SERVICE SATISFACTION IN HARARI REGION, ETHIOPIA: AN EMPIRICAL TEST OF A STRUCTURAL EQUATION MODEL

Abstract

Electricity is one of the essential components of basic human needs. Though, it is challenged by soaring incidence of irregular outages, low electricity access rate and high power system losses. These facts duly affect customer satisfaction, perceived quality and image of the company. The purpose of this study was to ascertain customers’ satisfaction of electricity in Harari region. To achieve the stated objectives, primary data was collected using close ended questionnaires from 385 resident customers. The measurement of customer satisfaction was made in view of SERVQUAL model by examining five service dimensions namely: tangibles, reliability, responsiveness, assurance, empathy and convenience. Structural equation model (SEM) was used in estimating the effects of the satisfaction of customers for electricity service among the variables studied. The findings of the study indicated that, the overall analysis of resident customers satisfaction based on the above variables indicated that there is a big gap between perceived and actual services delivered. Customers’ preference for electricity service was explored using choice experiments and a mixed logit model to quantitatively analyzes customers' preferences and their marginal willingness to pay for improved residential electricity services. The study provides an ex ante evaluation of customers' acceptance of hypothetical electricity services. According to the results, resident customers consider the electricity bill and the electricity mix as the two most important attributes when choosing their electricity services. Resident customers are willing to pay Birr 177 (USD 5.36) more to reduce outage once in a year