Estimating the value of reliability for business customers

A number of papers have examined the costs of business electrical outages, although the literature is not as extensive as that for costs of residential outages. Two main methods are generally employed to estimate outage costs. First, customers are provided with several scenarios that vary by such factors as outage length, season of the year and time of day, and customers are asked to assign a dollar value to these costs (direct cost method). Second, customers are asked to indicate how much they would pay to avoid a particular outage scenario (contingent valuation method). This paper uses both methods to estimate outage costs for business customers and then uses regression analysis to examine the determinants of outage costs.