ANALYSIS OF CUSTOMER SATISFACTION ON ELECTRICITY

AVAILABILITY AND USE, THE CASE OF HOSSANA TOWN SOUTH

NATION NATIONALITIES AND PEOPLES REGION, ETHIOPIA

MSc. THESIS

GEBREMICHAEL GEBREHIWOT BIRHANE

August 2022

HARAMAYA UNIVERSITY, HARAMAYA

Analysis of Customer Satisfaction on Electricity Availability and Use, the
Case of Hossana Town South Nation Nationalities and Peoples Region,
Ethiopia

A Thesis Submitted to College of Business and Economics

Postgraduate Program Directorate
HARAMAYA UNIVERSITY

In Partial Fulfillment of the Requirements for the Degree of

MASTER OF SCIENCE IN ECONOMICS
(ENERGY ECONOMICS)

Gebremichael Gebrehiwot Birhane

August 2022
Haramaya University, Haramaya

II
 HARAMAYA UNIVERSITY
POSTGRADUATE PROGRAM DIRECTORATE

As thesis research advisor, I hereby certify that I have read and evaluated this thesis prepared,
under my guidance, by Gebremichael Gebrehiwot, entitled ―Analysis of customer satisfaction
on electricity availability and use: The Case of Hossana town South Nation Nationalities and
Peoples Regional State, Ethiopia‖ and I recommend that it be accepted as fulfilling the thesis
requirement.
Mola Alemayohu (PhD) _______________ ______________
Major advisor Signature Date
Temesgen Kebede (PhD) _____________ _______________
Co-advisor Signature Date

As member of the Board of Examiners of the MSc Thesis Open Defense Examination, we
certify that we have read, and evaluated the thesis prepared by Gebremichael Gebrehiwot,
and examined the candidate. We recommended that the thesis be accepted as fulfilling the
Thesis requirement for the degree of Master of Science in Energy Economics.

________________________ _____________________ ________________

Chairperson Signature Date
________________________ ______________________ _________________
Internal examiner Signature Date
________________________ ______________________ _________________
External examiner Signature Date

Final approval and acceptance of the Thesis are contingent upon the submission of its final
copy to the Council of Postgraduate Program Directorate (CPGPD) through the candidate‘s
department or school graduate committee (DAC or SGC).

III
 DEDICATION

I dedicate this thesis manuscript to my lovely family and all my friends for their partnership
and for being always enthusiastic to see my success.

IV
 STATEMENT OF THE AUTHOR

By my signature below, I declare and affirm that this thesis is my own work. I have followed
all ethical and technical principles of scholarship in the preparation, data collection, data
analysis, and compilation of this Thesis. Any scholarly matter that is included in the Thesis
has been given recognition through citation.

This thesis is submitted in partial fulfillment of the requirements for the Degree of Master in
Energy Economics at Haramaya University. The thesis is deposited in the Haramaya
University Library and is made available to borrowers under the rules of the Library. I
solemnly declare that this thesis has not been submitted to any other institution anywhere for
the award of any academic degree, diploma, or certificate.

Brief quotations from this thesis may be made without special permission provided that
accurate and complete acknowledgment of the source is made. Requests for permission for
extended quotations from or reproduction of this thesis in whole or in part may be granted by
the Head of School or Department when in his or her judgment the proposed use of the
material is in the interests of scholarship. In all other instances, however, permission must be
obtained from the author of the thesis.

Name: Gebremichael Gebrehiwot Signature ___________

Date: Augest 2022

School: Business and Economics

V
 BIOGRAPHICAL SKETCH

The author was born in January 1984 in Tigray National Regional State, Ethiopia. He
attended his primary education at Merhisenay primary school. He then joined Nigste Saba
Secondary and Preparatory School for his high school studies. He completed his High school
class in the 2004 Gregorian academic year. After completion of his secondary school
education, He joined Haramaya University in 2005 and completed his Bachelor of Education
Degree in Geography and Environmental studies in 2007 and He joined Wachemo University
in 2015 in extention program and completed his Bachelor of Art in Economics in 2018.

After graduation, the author was employed in South Nation Nationalities and Peoples
Regional State, Hadiya Zone, Soro Woreda Gimbichu Secondary school as Geography
Teacher from the graduation of geography and environmental studies until he joined the
School of Graduate Studies of Haramaya University in November 2018 to pursue his MSc
degree in Energy Economics.

VI
 ACKNOWLEDGEMENTS

First of all, I would like to thank the Almighty God, without his will I couldn‘t do and
manage this study.

I would like to express my deepest and heartfelt gratitude to my major advisor Dr. Molla
Alemayohu, for his consistent guidance in each stage of this thesis starting from the
beginning selection of the research title up to the final research write up by devoting his
precious time, warm welcome at his office, and pertinent comments at each level of analysis,
his intellectual stimulation, for his constant professional guidance, encouragement, and
critical comments for the ultimate completion of this work successfully.

It is my great pleasure to extend my appreciation and gratefulness to my co-advisor, Dr.

Temesgen Kebede for his consistent guidance, encouragement and critical reviews while
developing the proposal, and for giving constructive and valuable comments and suggestions
by devoting his precious time and for the proper guidance during the research work.

My special appreciation also goes to my friends who contributed a lot in editing and giving
their valuable comments for the refinement of the thesis. I would like to express my gratitude
and deepest thanks to all my family and who supported me continuously and unconditionally,
giving me the motivation needed to succeed and persist.

Finally, I would like to offer my sincere all respondents who were kind to cooperation and
willing to give genuine information for the preparation of the main body of this study.

VII
 LIST OF ACRONYMS AND ABBREVIATIONS

AfDB African Development Bank

CDF Cumulative Distribution Function
CSA Central Statistics Authority
EA Electricity Availability
EEU Ethiopian Electric Utility
ETB Ethiopian Birr
GB Giga Byte
GTP Growth and Transformation Plan
GW Giga Watt
IEA International Energy Agency
IEG International
Km Kilometer
KWh Kilo watt hour
LPG Liquefied Petroleum gas
MoWE Ministry of Water and Energy
MoWIE Ministry of Water, Irrigation and Energy
MW Mega Watt
OECD Organization for Economic Co-operation and Development
SLS Small – solar Lighting System
SNNPR South Nation Nationalities and Peoples Region
UNDP United Nation Development program
W Watt
WB World Bank

VIII
 TABLE OF CONTENTS

STATEMENT OF THE AUTHOR V

BIOGRAPHICAL SKETCH VI

ACKNOWLEDGEMENTS VII

LIST OF ACRONYMS AND ABBREVIATIONS VIII

TABLE OF CONTENTS IX

LIST OF TABLES XII

LIST OF TABLES IN THE APENDEXES XIV

ABSTRACT XV

1. INTRODUCTION 1

1.1. Background of the Study 1

1.2. Statement of the Problem 3

1.3. Objectives of the study 5

1.3.1. General objectives 5

1.3.2. Specific objectives 5

1.4. Basic Research Questions 5

1.5. Significance of the Study 5

1.6. Scope of the study 6

1.7. Organization of the Study 6

2. LITRATURE REVIEW 7

2.1. Definition and Concepts 7

2.1.1. Electricity access 8

2.1.2. Electricity Demand 10

2.1.3. Electricity Consumption and Supply 11

2.1.4. Electricity Availability 12

2.1.5. Customer Satisfaction 12

2.2. A Brief History and Status of Electricity in Ethiopia 13

2.3. Energy Ladder Model 14

IX
 2.4. Determinants of electricity availability 15

2.5. Empirical Literature 17

2.6. Conceptual Framework 19

3. RESEARCH METHODOLOGY 21

3.1. Description of the Study Area 21

3.2. Demographic Characteristics 22

3.3. Services and Infrastructures 22

3.4. Data Type and Sources 22

3.5. Sample Size Determination and Sampling Techniques 23

3.6. Methods of Data collection 24

3.7. Methods of Data Analysis 24

3.7.1. Econometric specifications 25

Double-Hurdle Model Specification 25

3.8. Description of Variables 26

3.8.1. Dependent variable: 26

3.8.2. Independent Variables for Households electricity access and intensity of use: 27

3.8.3. Independent Variables for Households‘ Satisfaction level on electricity availability 28

4. RESULTS AND DISCUSION 30

4.1. Descriptive Statistics of Variables Affecting Electricity Access 31

4.1.1. Descriptive statistics of continuous variables 31

4.2. Household’s electricity access and intensity of use 36

4.2.1. Households‘ electricity access and its source 36

4.2.2. Households‘ with electricity access, types of electricity providing process and its
reasons 36

4.2.3. Causes for household‘s limited electricity access 37

4.2.4. The average amount of price households paid per month for electricity 38

4.2.5. Severity of electricity shortage on a Respondents‘ Operations 39

4.2.6. Shortage and high cost of digital meter effects on household‘s electricity access 39

4.2.7. Electricity consumption per month in KWH 40

X
 4.3. Households Level of Satisfaction 41

4.3.1. Households Level of satisfaction by the availability and use of electricity 41

4.3.2. Households use of electricity for different purpose 41

4.3.3. Adequacy of electricity for household‘s use 42

4.3.4. Households‘ electric appliance and the extent of electricity use 42

4.3.5. Households‘ damages of electric appliance because of voltage fluctuation 43

4.3.6. Households supply of reliable electricity 44

4.3.7. Households hours of available electricity supply 44

4.3.8. Households‘ demand of electricity 45

4.3.9. Households times of power outage per day 46

4.3.10. Households alternative sources of energy when electricity is insufficient to execute

daily activities and the purpose of use alternative energy 47

4.3.11. Household‘s willingness to pay more for electric use than averagely paid now and
their extent 47

4.4. Econometric Model Results 48

4.4.1. Double hurdle Model 49

4.4.1.1. Factors Determining Access of Electricity 49

4.4.1.2. Factors Determining Electricity Intensity of Use (Consumption) 52

4.5. Analysis of the Open Ended Format 54

4.6. Heckman and Double hurdle model 55

5. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 56

5.1. Summary and Conclusions 56

5.2. Recommendations 58

6. REFERENCES 61

7. APPENDIXES 68

XI
 LIST OF TABLES

Table Page
1 . Total number of sampled households 24
2 . Explanatory variables used in this study 29
3 . Descriptive statistics of continuous variables 32
4 . Distribution of sample respondents by sex 33
5 . Distribution of sample respondents by marital status 34
6 . Distribution of sample respondent‘s educational status 34
7 . Household‘s type of houses and the houses household gets 35
8 . Distribution of sample respondent‘s occupation 35
9 . Households‘ electricity access and sources 36
10 . Electricity providing process and its reasons 37
11 . Household‘s causes of limited electricity access 38
12 . Household‘s average amount of monthly electricity price 38
13 . The extent of electricity shortage affects the household‘s electricity access 39
14 . Shortage and high cost of digital meter and its effect on household‘s electricity 40
15 . Household‘s electricity consumption per month in KWH 40
16 . Household‘s level of satisfaction on electricity availability and use 41
17 . Use of electricity for different purpose 42
18 . Electricity use is enough for different purpose 42
19 . Electric devices equipment and the extent of use 43
20 . Household‘s electric appliance damage by voltage fluctuation 43
21 . Household‘s supply of reliable electricity 44
22 . Household‘s getting available electricity in terms of hours 45
23 . Household‘s electricity demand 45
24 . Household‘s Times of power outage per day 46
25 . Household‘s alternative source of energy in times of insufficient electricity and the purpose of
using alternative energy 47
26 . Household‘s willingness to pay more for electricity use than averagely paid at present and its
extent 48
27 . Estimated access model part of double hurdle model (Probit part) 51
28 . Estimation of truncated part of double hurdle model 53

XII
 LIST OF FIGURES
Figure Page

1. Conceptual frame work 20

2. Map of the study area 21

XIII
 LIST OF TABLES IN THE APENDEXES

Appendix Table Page

1.Multicollinearity test for the variables 68

2. Normality test for the variables 68
3. Test of Heckman selection model - two-step estimates (regression model with sample
selection 69
4. Double hurdle (Probit and Truncated) regression model 70

XIV
 ABSTRACT

The main objectives of this study were to examine urban households’ electricity access, to
analyze urban households’ intensity of electricity use and evaluate households’ satisfaction
level on electricity availability and use in Hossana. Primary data collected from 384 sample
households selected through two-level mixed-method sampling techniques. First, two sample
kebeles that have densely populated and electric access were selected purposively. Second,
sample households were selected using a simple random sampling technique. The primary
data was also supplemented by secondary data. Both descriptive and econometrics models
were used for analysis. A double hurdle model was used to identify factors affecting urban
household’s electricity access and intensity of electricity use. Descriptive statics which was
ordered by the Likert scale was used for measuring the level of customers’ satisfaction.
Household income, family size, educational level and house own had positive and significant
effects on electricity access. Household income and electricity price affected intensity of
electricity use positively and significantly whereas the marital status, educational level and
owning a house affected negatively and significantly. On the other hand, the result of the
descriptive statics showed that only about 11.6% and 47.4% households were satisfied and
dissatisfied by the use of electricity respectively, about 41% of households were neutral. The
Government and other concerned bodies should invest seriously in infrastructure in the
power sector to achieve satisfaction level of households and give attention to better expand
awareness of the electricity uses.

Keywords: Double hurdle, electricity access, Ethiopia, Hossana town, intensity of use and
satisfaction.

XV
 1. INTRODUCTION

1.1. Background of the Study

Currently, electricity is highly essential for the growing economies in the world. The discovery
of electricity is a blessing to this world. Electricity helps different sectors such as industry,
service, and agriculture to properly execute their functions. It provides peoples comfort, luxury
and satisfies their needs. Empirical studies documented showed that Kerosene oil lanterns and
gas lamps are commonly used for lighting and cooking, but nowadays electricityhas been used as
a modern energy source (Pragyan Dash, 2014).A reliable electricity supply stimulates economic
growth. It will have positive spillover effects on low-income households and contribute to
environmental sustainability. Electricity dependability also reduces the need for wood-based
fuels, like charcoal and firewood (Kuunibe et al., 2013).

In many countries in Sub-Saharan Africa, electricity is not only limited in terms of access but
also its quality in terms of reliability is questionable. This is fueled, in part by the growing
demand for energy, with electricity consumption estimated to grow at the rate of 2.6% per
annum, shortage of funds to undertake investment and diversify generation (Muzenda, 2009),
and partly by rapid population growth and urbanization (Mariwah et al., 2010).

Electricity is essential for human and economic development. Between 2008 and 2012, the
global demand for electricity consumption and economic growth rate both increased at a
compound annual growth rate of 2.8% and 4.0%, respectively (Kim et al., 2015). This trend is
expected to rise more than 10%. Households without access to electricity have less productive
hours during the day. They use potentially harmful illumination or energy sources, lack adequate
refrigeration technologies, and are less able to safely keep food. About 13% of the world
population lack access to electricity at home. In addition, through their access to information and
ability to communicate (cell phones, radios, etc.) and constraints of traditional technologies,
people are limited in their productive capacity due to a lack of electricity and the relatively high
costs of operating electronic tools without a reliable source (WDI, 2016).

Electricity is needed for the attainment of growth and development agenda for all countries as it
serves as an input for the production of goods and services. Its global demand and consumption
have grown steadily over the years, but the growth of supply is not parallel with the growth of
demand, especially in developing countries like Ethiopia. For instance, the global electric power
consumption is reached 3126.326 KWH per capita in 2014 (World development indicators
2017).In developing countries about 1.5 billion people lack access to electricity. In addition over
3 billion people rely on solid fuels for cooking (UNDP and WHO, 2009).
Electricity is demanded for different services at the household level, such as lighting, heating,
running small scale business, cooking and using different types of electric appliances for
different purposes like refrigerator, washing machines and others to simplify their day to day
activities (Naeem et al., 2010).

The growth of households‘ electricity demand in low-income countries is driven largely due to
the shift from traditional energy sources to the modern form of energy as they are leading quality
of life and ownership of high energy-consuming appliances.

In Ethiopia, the total electricity demand grows at an average rate of between 15% and 20%
percent annually (Kifle, 2015). According (Beyene, 2018) from the total electricity supply for
residential services in Ethiopia most electricity is produced from hydropower 90.8%, from solar
photovoltaic 3.2% and the remain 6% is from different sources such as wind farm, mini-grid, and
others. About 45% of the total population of Ethiopia has access to electricity, of which 26.5%
are rural dwellers, and 85.4% are urban dwellers. In Ethiopia, access to the gridline may not
necessarily imply a reliable electricity service connection.

Ethiopia is one of the top 20 countries with a deficit in access to electricity, with 63.9 million
people without access to electricity in 2010 and 81.1 millionpeople lacking access to non-solid
fuels (World Bank, 2013). Ethiopia has abundant natural resources, but the supply of electricity
is monopolized only by the government and most of its socioeconomic indicators are extremely
low. For instance, Bereket et al.(2001) showed that there is highly unaffordable electricity
consumption for urban households in Ethiopia and the shortage has already affected the poor
economy of the country. However, to the best level of the researcher‘s knowledge, there is no
clear study that indicates the customers‘ satisfaction with electricity availability and uses in
urban areas of the country.
 3

Therefore, this study attempts to fill this lacuna by conducting empirical research on customer
satisfaction on electricity availability and use in Hosanna town in Southern Nation
Nationalities and Peoples Region of Ethiopia. Thus, this study examined urban households‘
electricity access, analyze households‘ intensity of electricity use and evaluate customers‘
satisfaction level on electricity availability and use in Hossana.

1.2. Statement of the Problem

Electricity is highly essential for the economic development of a country in general and plays
a vital role in improving the standard of living at the household level in particular. It is one of
the crucial elements of development in the world (Independent Evaluation Group, 2008)

Studies showed that urban electrification coverage is more than 90% across the world, but the
coverage is less than 60% in urban areas of Sub Saharan Africa (WB, 2013). In most
countries, electricity supply is far less than its demand. Hence, bridging the gap between
demand and supply of electricity through building more power generation centers, and
making its availability reliable has become a prior political agendum on top of other economic
and financial agenda.

The electricity generating capacity in Ethiopia is about 90% from hydro power and the
remaining 10% of generated from different sources such as; solar photovoltaic, geothermal,
wind farm, mini-grid, and others (Kebede, 2015), and production covers only about 10% of
national energy demand. Electricity is extremely important in modern economy. Until now
merely having access to power is not sufficient, especially in developing countries like
Ethiopia. The reliability of supply is also essential. In Ethiopia, the number of outages
(technical and non-technical) is very high compared with developed countries. EEPCO
(2014/15) reported that the number of outages experienced by all customers in all sectors in
Ethiopia averages 1080 hours per year (equivalent to 45 days per year), while in developed
countries like the Netherlands and USA, the average outage for low voltage consumers is 26
and 106 minutes per year, respectively (Bloemhof et al., 2001). When power is interrupted
frequently and for long days outages of electricity the households start to search for other
energy sources. Frequent and sustained power outage increases the demand for firewood.
 4

But Ethiopia has the problem of access to electricity and reliability of its supply. For instance,
57% and 44.3% of Ethiopian households have access to at least one source of electricity and
basic electricity supply, respectively (World Bank Group, 2018). The remaining 55.7% of
households have no access to any electricity sources and are relying on other energy sources,
such as dry-cell batteries, or have a grid or off-grid electricity supply that does not provide
basic energy service (available only to light the house and charge phones). Then the reliability
and availability of electricity supply is holding back the grid-connected households from
moving to a higher tier for access to electricity. For instance, about 57.6% of grid-connected
households face between 4 and 14 outages per week and about 2.8% face more than 14
outages per week. Electricity is available at least 23 hours a day; 7 days a week, for only
about 21% of households, but about 5% of households receive less than 4 hours of service per
day (World Bank Group, 2018).

The importance of electricity is multidimensional. It can promote inclusive growth, which in

turn will reduce poverty directly or indirectly and simplify the day to day activities of the
people. Hossana has a connection to the grid for getting electricity access but it has a
shortage, and lack of quality, the problem of reliability and availability at the household level.
The household uses electricity for different purposes, such as lighting, cooking, heating and
generating small scale businesses at their own home. Then the shortage and the problem of
availability of electricity affect these activities and household‘s satisfaction. This can be
inferred from the fact that specifying the level of customers‘ satisfaction on electricity
availability and uses with other activities used for solving the problem of electricity
availability.
Hence, studying the intensity of electricity use at the household level is important to forward
possible solutions to make electricity accessible and its supply reliable. It will also fill the
knowledge gap that exists due to limited studies on customer satisfaction level on electricity
availability and use in Hossana town by selecting 384 sample respondents systematically from
the two purposively selected kebelles. The study used both descriptive method and
econometric models to examine household‘s electricity access and customer‘s satisfaction
level.
 5

1.3. Objectives of the study

1.3.1. General objectives

The general objective of this study is to investigate customers‘ satisfaction level on the
availability and uses of electricity at household level in Hosanna town with the following
specific objectives

1.3.2. Specific objectives

1. To examine urban households‘ electricity access.

2. To analyze urban households‘ intensity of electricity use.
3. To evaluate customers‘ satisfaction level on electricity availability and use at
household level.

1.4. Basic Research Questions

This study is intended to answer the following questions.

1. How does urban households‘ electricity access look like?
2. What does the intensity of urban households‘ electricity use look like?
3. What does customers‘ satisfaction level look like on electricity availability and its use?

1.5. Significance of the Study

Electricity is one of the crucial inputs that facilitate the country‘s development process.
However, electricity access in Ethiopia is still very low and the challenge is being further
exacerbated with low growth of electricity supply, high population growth, and rapid
urbanization in the country. Hence, investigating the major determinants of a household‘s
electricity availability and its use would be an important information source for the public and
government in developing strategies that could help to facilitate electricity accessibility and
its supply reliability in the study area.
The findings of this study can also serve as an input for policy makers to formulate effective
policies, strategies, development programs and projects to alleviate the power problems of the
society and enhance the living condition of the households by ensuring effective and efficient
utilization of electrical appliances. By integrating the results from the above analysis, this
 6

paper presented several improvement strategies which can be implemented to improve the
level of satisfaction on electricity availability and use.

1.6. Scope of the study

This study was conducted in Hosanna town, which considers the satisfaction level of urban
households on electricity accessibility and its reliable supply. The study focused on the
availability of electricity with the broad objective of investigating customer satisfaction level
on electricity availability and its uses, examining urban households‘ electricity access and
analyzing urban households‘ intensity of electricity use. More specifically, the study will
analyze the effect of the socioeconomic and demographic factors on the electricity availability
and the interrelationship between different electrical appliances on electricity consumption
and socioeconomic variables on the use of electrical appliance.

1.7. Organization of the Study

This thesis is organized into five main chapters. The first chapter is introduction part. Chapter
two presents theoretical literature, empirical literature and conceptual frame work. The third
chapter outlines the research methodology used in this study, including an overview of the
study area, sampling procedure, methods of data collection and data analysis as well as the
definition of variable. Chapter four discusses the descriptive and econometric results of the
study. Finally, chapter five presents summary conclusions and recommendations of the study.
 7

2. LITRATURE REVIEW

This chapter contains the theoretical and empirical review of the pieces of literature. The
theoretical literature review depends on a theoretical framework of the review of related
literature that considers different kinds of literature or studies related to energy in general and
electricity in particular. The empirical literature pays more attention to the analysis of
customer satisfaction on electricity availability and the methodology used to examine
electricity availability.

2.1. Definition and Concepts

Energy is usually defined as power. Encarta Encyclopedia(2003), defined energy as the

capacity to do work or the stored ability to perform work (produce heat); it exists in various
forms, including mechanical, thermal, chemical, electrical, radiant and atomic.

Energy, the capacity to do work or the stored ability to perform work, exists in a number of
different forms, such as chemical energy, electrical energy, heat (thermal) energy, light
(radiant) energy, mechanical energy, and nuclear energy (UNDP, 2009). Energy can be
extracted from various sources which are categorized as primary and secondary sources.
OECD(2010) uses the term ‗primary source of energy to refer to the energy available in any
fuel before it is converted to a delivered energy.

Energy can be generally categorized into two major components: traditional and modern (for
example traditional biomass usage and modern fuels that is electricity and petroleum). In a
general way, energy is the capacity to do work or the stored ability to perform work exists in a
number of different forms such as chemical energy, electrical energy, heat (thermal) energy,
light (radiant) energy, mechanical energy, and nuclear energy ( UNDP and WHO, 2009).
Then the above types of energy can be extracted from various sources which are categorized
as primary and secondary sources. According to OECD(2010) the term ‗primary source of
energy‘ refers to the energy available in any fuel before it is converted in to a delivered
energy type. It is any kind of energy that exists naturally and has not been modified into
another form by human beings. Reddy, S(2004), holds the view that the primary energy
resources are processed in a power plant or other facility and are transformed into secondary
forms of energy sources such as electricity.
 8

On the other hand, according to a definition provided by Clancy et al.(2003) and

(International Energy Agency(2010), the secondary energy source is electricity since it is an
outcome of the human-made transformation process. That means we get electricity from
renewable and non-renewable sources. Then we get electricity through the conversion of
primary sources, such as hydro, coal, natural gas, oil, nuclear, wind or solar energy. Thus, it
is also referred to as an energy carrier from which energy is reached through the process to the
end-user. But in our country the dominant source of electricity is obtained from hydropower.

According to Barnes et al.(2004) and Ntobeg, N(2007), the availability of electricity in urban
areas seems to act as a catalyst for people to transform from a traditional type of energy
source to modern fuels. Nonetheless, it should be known that the emergence of electricity is
not as a replacement for the firewood as such, but merely as a supplement. For example,
according to Farsiet al.(2005), despite a major shift away from the use of biomass fuels
towards commercial fossil fuels and electricity over the last couple of decades, in urban areas,
there are still many Indian high income households who opted to purchase fuel wood rather
than substitution with electricity for their primary source of cooking energy.

Electricity and Electricity use:is very essential part of modern life and that affects every
sphere of life. It is vital for residential, social, commercial as well as industrial uses. It is
especially fundamental for emerging economies whose national developmental agendas
require constant availability of power. Many households rely on electricity for performing
domestic activities like cooking, washing, heating, cooling, ironing press, lighting, and for
operating appliances, computers, electronics machines, and public transportation systems.
With technological advancement, people have become more and more dependent on electric
power since most of these technological devices are powered by electricity (Twerefou, 2014).

2.1.1. Electricity access

Access to electricity is best described with the percentage of households who have electricity
connection at their home. The connection may vary by quantity (hours of availability in a
day), quality (rated voltage and frequency), and use (light bulb to a wide range of end uses).

Access to electricity is measured based on seven attributes: Capacity, Availability, Reliability,

Quality, Affordability, Formality, and Health and Safety (WB, 2018).
 9

According to the world energy outlook 2009 OECD/IEA (2009), totally in the world
about1456 million people have no electricity access. Out of them in OECD only 3 million
peoples without access to electricity, which means almost 100% of people in OECD and
transition economies have access to electricity. But in developing countries about 1453
million peoples lack access to electricity which means only 72% of people in developing
countries have access to electricity.

In 2017, the global electricity access rate in urban areas reached 97.4%, up from 94.7% in
2001 (in rural areas, the rate was 78.7%). Urban electricity access is generally high in Latin
America (99.6%) and in the Asia Pacific (99%) region, and the access rate in sub-Saharan
Africa increased from 60% of the population in 2000 to nearly 79% in 2017 ( (Global status
report, 2019).

In sub-Saharan African countries, the serious problem with universal electricity access is high
charges for household electrical connections. The connection charges in sub-Saharan Africa
are among the highest in the world, depressing access to electricity in many urban areas. The
high connection charges mean that the social and economic benefits of electricity are
available only to wealthier households but the poor households are dependent on traditional
means of acquiring energy (WB, 2013).

Ethiopia is believed to have a huge potential for other alternative energy resources, such as
traditional and modern, much of the potential energy resources are still unutilized and the
existing supply of fuels could hardly cope with the ever-increasing demand for more fuel
domestic requirement (Ministry of Water and Energy of Ethiopia (MoWE), 2009). As Zenebe,
(2007) pointed out electricity and petroleum products are the two modern fuel sources used in
Ethiopia accounting for about two percent and six percent of the total energy consumption,
respectively. Among petroleum products, kerosene is the most important one, mainly
available in urban areas, although there is some consumption in rural areas.
According to the World Bank study WB(2013), Ethiopia is one of the top 20 countries with a
deficit in access to electricity, with 63.9 million people without access to electricity in 2010.

EEU(2012) is undertaking a huge electrification program to increase the present low rate of
electricity access and plans to construct several new generating facilities. In 2012, under the
government's five-year Growth and Transformation Plan (GTP), a huge electrification
 10

program is being undertaken to increase the low rate of electricity access. Large power plants
are under construction with a total installed generation capacity of 8450 MW. The Grand
Ethiopian Renaissance Dam (6000 MW), the Gilgel- Gibe III (1870 MW), Genale-Dawa (254
MW), Adama II wind power (153 MW) and the 70 MW geothermal power development in
the rift valley are the ongoing power projects expected to rescue the country from power crisis
(MoWE, 2011). At present, except Grand Ethiopian Renaissance Dam, all others projects are
completed and are in use, but the problem of access to electricity are still not solved.

2.1.2. Electricity Demand

Electricity demand is a derived demand by households for lighting, cooking, heating and
generating small-scale businesses to produce goods and services. It is common knowledge
that electricity is primarily used in the domestic sector for lighting, heating, cooking and
generating small-scale business by running appliances like refrigerators, air-conditioners
(ACs), water heaters, kitchen appliances, television (TV), music system, etc. (Madhu Khanna
and Narasimha D. Rao, 2009).
The study of Davis S. and Durbach I(2010), found that it necessary to make a distinction
between what might be termed the amount of electricity demanded (or perhaps apparent
electricity consumption and the amount of electricity consumed (or actual electricity
consumption).

According to IRENA(2012), in developing countries, electricity demand tends to grow at least

as fast as GDP. Demand in the Central and Eastern of Africa will grow at the rate of GDP
growth plus 2% (so more than 7% electricity demand growth per year between now and
2030); while in the West it will grow at 1% above GDP growth. In Southern Africa, it is
assumed that electricity growth will match the rate of GDP growth (so not more than3 -4%
electricity demand growth per year), while in North Africa, electricity demand is assumed to
grow at a slower rate than its GDP counterpart, given the relatively high electrification rate
and electricity consumption, and the larger industrial base. Urbanization rates are projected to
rise by about 20 percentage points by2050. Almost two-thirds of Africans will live in cities in
2050, compared with less than 40% today. In Ethiopia, only 60 % of the population resides in
areas served by the network, less than 25 percent is connected to electricity services, with just
10 percent receiving service in rural areas. Sustained economic growth in Ethiopia will further
 11

fuel electricity demand, which is predicted to increase at above 10 percent per annum in the
medium term (Ethiopian Electric Power Corporation, 2014).

Ethiopia is focusing on the development of the huge hydro potential it possesses in the
Eastern African Region (African Development Bank(AfDB), 2014). Ethiopia‘s electricity
utility plan addresses the power interconnection issue with neighboring countries to meet the
future demands for electric energy in these countries from environmentally friendly and cheap
hydro energy of Ethiopia (Dereje D, 2013). Hence, Ethiopia should widen and deepen its
cooperation with the neighboring countries in the political, economic and social fields for the
mutual benefits of all the population in the region through integrated development of their
power systems and interconnection links to effect cross-border electricity trading (EEU,
2012). This cross-border trading of energy is used for economic development of the country
especially to get currency.

2.1.3. Electricity Consumption and Supply

Ethiopia has an economically utilizable electricity generation potential of approximately

45,000MW from hydro, 5,000MW from geothermal, and 10,000 MW from wind, though only
a fraction of this potential has been harnessed so far (EEPCO, 2015). Wood fuel and animal
dung still provided the vast majority of its domestic energy needs. During about 45% of
Ethiopia's entire population has access to electricity, with 26.5% rural areas and 85.4% in
urban areas. In Ethiopia, grid access does not always imply a stable power service connection
(Beyene, 2018).

In 1971 the total primary energy supply (TPES) in the world was 5523 MT, while in 2014, it
increased by almost 2.5 times to 13,700 MT (EIA, 2016). However, the total final
consumption by sector did not dramatically change from 1971 to 2014.

According to CEER (2008), the Quality of supply is normally split into three different
dimensions: continuity of supply, voltage quality and commercial quality.

Continuity of supply is related to the availability of the service. The fewer instances of
interruptions and the shorter these interruptions are the better the supply is from the
customer‘s point of view. For that reason, continuity of supply is determined by the number
 12

and duration of supply interruptions, and it is extremely related to network investments and
practices of operation and maintenance by distribution operators.

2.1.4. Electricity Availability

Ethiopia can generate over 50,000 MW from water, 1.3 million MW from wind, and 10,000
MW from geothermal energy sources (MoWE, 2011). Despite this huge potential of energy
sources, per capita power availability is significantly lower than in many African countries.
The electric energy consumption per capita (77 KWh) is one of the lowest among developing
countries (Dereje D, 2013).
Nonetheless, during the past few years, government investment in the power sector has
increased substantially and the power supply has improved considerably. According to (Araya
A. and Yisehak D, 2012), until 2010, the overall production of electricity remained at 2,000
MW. But, with expansion works, the country has currently installed electricity with
generating capacity of about 2,268 MW from hydro, wind and geothermal energy.
The National energy policy envisages the development of hydro, geothermal, natural gas,
coal, wind and solar energy resources based on their economic viability, and social and
environmental acceptability. The National energy policy emphasized the need for equitable
distribution of electricity in all regions of the country in support of the nation‘s socio
economic-development (Dereje D, 2013). The government of Ethiopia in collaboration with
the Chinese government prepared a solar and wind master plan for the whole country, which
can be very useful to identify the gross amount and distribution condition of wind and solar
energy resources, construction conditions, cost and other limiting factors of wind and solar
power generation projects (Dereje D, 2013).

2.1.5. Customer Satisfaction

All over the world, customers‘ satisfaction has become a veritable tool for measuring
organizational performance and relevance. This explains why many countries established
customers‘ satisfaction degree otherwise known as Customers Satisfaction Indexes (CSI).

Customer satisfaction or dissatisfaction is the outcome of providing value that meets or

doesn‘t meet the customer‘s needs in that situation. Service quality must be measured as an
antecedent to both customer value and satisfaction measure the value perceived by customers
 13

during usage and measure the satisfaction or dis satisfaction that is the realized end state
(Oakland S, 2006).

Several researchers emphasized the importance of customer service as a key to organizational

success. Arshi A and Jassim M(2013) propound that the most productive output of an
organization is the production of customer satisfaction. The real value lies in delivering
customer satisfaction which precedes customer retention and profits. Although most
organizations understand the importance of this stakeholder, few are able to commit
themselves to achieving customer satisfaction. According to the EEPCO(2011/2012), annual
bulletin of 2011/2012, concerning the quality of supply, the service quality in the electrified
areas is not satisfactory.

2.2. A Brief History and Status of Electricity in Ethiopia

According to Arnold et al., (2003), most of the Ethiopian households‘ have long relied for
their energy needs on wood fuels. Therefore, fuel wood remained a vital part of life in many
developing countries. The very high degree of dependence on wood and agricultural residues
for household energy has impacts on the social, economic, and environmental well-being of
society (Toleshi, 2016).

In contrast to the majority of Sub-Saharan African countries, Ethiopia's energy sector is

characterized by a heavily dependent on biomass (firewood, charcoal, crop aftermath, and
animal dung). Furthermore, due to the unreliability of electricity and low access rate, nearly
60 million tons of biomass are consumed for energy purposes, with approximately 81% of the
estimated 16 million households using firewood, 11.5% using leaves, dung cakes, and
charcoal, and only a few using modern fuels such as electricity. In Ethiopia, the first generator
was acquired by King Menelik II of Ethiopia in the late 1890s to light his palace (Ibid).

The diplomatic relations between Ethiopia and Germany developed alright during the
period of Menelik and he received the generator as a gift from the German government in
light of expressing their good relationship (Hydropower, 2006).

According to Toleshi, (2016) electricity was extended to light the streets of Addis Ababa three
decades ago, in connection with King Haileselassie coronation ceremonies in 1930. Since
then, Ethiopia's electric energy sector has seen a number of development and restructuring
 14

activities. Ethiopia's state-owned electric company now maintains monopoly power over the
industry, which includes the generation, transmission, and distribution of electricity.

2.3. Energy Ladder Model

The energy ladder hypothesis is one of the most frequent conceptualizations of household
energy usage dynamics is the energy ladder hypothesis. Electricity is at the top of the energy
ladder of household energy use in the energy ladder model, which is based mostly on the
consumers' wealth, income, and education levels. According to (Baldwin, 1986, Leach, 1992
and Smith, 1987) low-income households utilize traditional stoves and cooking fuels
including animal dung, charcoal, and wood, whereas higher-income households use modern
cooking technology and fuels. Household‘s transition from traditional fuels and cooking
stoves to modern fuels and cooking equipment as their income rises.

Furthermore, studies on household energy demand and choice has indicated that households
in transition (those with incomes ranging from low to high) use transition fuels like charcoal
and kerosene. Higher-income households use energy that is cleaner and more expensive, such
as liquefied petroleum gas and electricity, and low-income households use biomass fuels
(Barnes and Floor, 1996; Heltberg, 2005, and Hosier and Dowd, 1987).

Solid Fuels Transition Fuels Sophisticated Fuels

Agric Residue, Coal, Lignite, Electricity, Natural
Wood, Animal Dung Kerosene, Charcoal Gas, Biogas, LPG

Figure : Energy Ladder Model

According to Hosier and Kipondya, (1993) indicated that, energy ladder hypothesis is
predicated on the economic theory of consumer behavior. When household income rises,
however, they not only consume more of the same commodity, but they also change to more
sophisticated, higher-quality goods. According to Baland et al., (2007), the energy ladder
hypothesis is based on the theoretical assumption that low living standards lead to higher
dependence on firewood and other biomass fuels as a result of a combination of income and
substitution effects.
 15

Cleaner fuels are normal economic goods, according to the energy ladder hypothesis
(Démurger and Fournier, 2011; and Rajmohan and Weerahewa, 2007). As a result, the
energy-ladder concept highlights the importance of income in fuel selection. However, it
appears to imply that move to a new fuel also entails move away from a previous one.

Study by Mekonnen and Kohlin (2008) proposed an energy-demand ladder, arguing that as
incomes rise, households' fuel demand is influenced by the types of appliances they use, and
that fuel choice and demand are influenced by the reason for which energy is required.
Furthermore, it has been confirmed that households in developing countries do not switch to
modern energy sources, but rather consume a combination of fuels, which may involve
combining solid and non-solid fuels as energy sources.

As a result, instead of moving up the income ladder step by step, households select different
fuels from a menu. Depending on their finances, interests, and needs, they may choose a
combination of high- and low-cost fuels (World Bank, 2003). As opposed to fuel switching or
an energy ladder, this led to the concept of fuel stacking (multiple fuel use) (Heltberg, 2005
and Masera et al., 2000). The reasons for using different fuels are varied and are not solely
based on economic factors, while the affordability or cost of the energy service does influence
household decision.

In some case, Households may use more than one fuel source to increase supply security.
Other case, the decision are based on cultural, social, or economic preferences (Pachauri and
Spreng, 2004).

2.4. Determinants of electricity availability

This study took Age, Gender, Education background, and Family size as determinants of
households‘ electricity availability under the demographic characteristics of the respondents.
Household income, electricity price, types of appliances, and types of houses were taken from
socio economic perspectives which have their own effects on electricity consumption and
availability based on different studies.
 16

Households’ demographic characteristics

 Age:is the living year of the house holds on the earth. According Sardianou E(2007)
study on Economic and Social Dimensions of Household Energy Use, the action of
energy saving decreases when the age of peoples increases. Other studies also show
electricity consumption on the residential sector rises with age
 Gender: is a dummy variable which will use 1 for male and 0 for others.
 Educational back ground: according to Zhou S, & Teng F(2013) study shows
households with lower educational level have low electricity consumption than higher
educational level.
 Family size: is the number of peoples living with in each household. Household
electricity consumption increases by approximately 8% points for every additional
family member (Zhou S, & Teng F, 2013).
Households’ Socio–Economic Factors

 Households Income: One of the main determinates that influence the household‘s
consumption and availability. According to Zhou S, & Teng F(2013), study the higher
income households consume high amount of electricity. But Kavousian et al.(2013)
study shows there is no significant correlation between electricity consumption and
income level of the household. Others studies found no Consumer‘s private monthly
income and electricity expenditures are statically significant variables affecting
conservation altered behavior (Sardianou E, 2007).
 Price of electricity: is the payment of the household for each kilowatt uses of
electricity. When the electricity price increases by 10% the demand for electricity can
be decreased by 4.5% (Kilian L, 2007). Price of electricity has insignificant impact on
electricity consumption (Chen Y, 2017). According to the Gabreyohannes E(2010),
study concludes that the long-run effect of price changes significantly affects
electricity consumption. However, the study does not look at the effect of other
macroeconomic variables on the residential demand for electricity in Ethiopia.
 Types of Electricity devices: It is a well-known fact that more use of electricity
device led to more consumption of electricity. In urban areas, since their income is
higher their living standard is higher and more luxurious. They indulge for their own
satisfaction and enjoyment. Hence, they use various electronic devices for example
TV, phone, music system, washing machine, cooking machenes, refrigerator, and
 17

computer and so on. All these devices have their own contributions on the use of
electricity. More frequent use of appliances leads to higher electricity consumption
(Kavousian et al., 2013). The existence of energy efficient appliances is associated
with lower power consumption (Chen et al., 2013).
 House ownership:is a dummy variable which represents 1 for households which owns houses
and 0 for households which have no house. Houses which are modern type and traditional
types of houses. From these types of houses modern house is constructed to use different
types of devices but the traditional types of house is not structured like the modern to use
different types of devices. Then the modern types of house is used more amount of electricity
or more comfortable for using electricity.

2.5. Empirical Literature

The UN(2015) Sustainable Development Goals states that over 1.2 billion people one in five
people of the world‘s population do not have access to electricity. Without electricity, women
and girls have to spend hours fetching water, clinics cannot store vaccines for children, many
schoolchildren cannot do homework at night, and people cannot run competitive businesses.
Another 2.8 billion people rely on wood, charcoal, dung and coal for cooking and heating,
which results in over four million premature deaths a year due to indoor air pollution. Out of
the total 1.2 billion people without electricity access, 99 million are in East Asia and Pacific
region, 378 million in South Asia, and 591million in Sub-Saharan Africa (World Bank, 2014).

Achieving universal access to electricity is one of the most important goals set for the energy
sector by governments in the developing countries. Energy access is increasingly seen as a
vital catalyst to wider social and economic development, enabling education, health and
sustainable agriculture, and creating jobs. Energy for productive uses is particularly important
to enable local business innovation and create a more vibrant economy for communities and
countries, while providing societal benefits as well (UN, 2012).
Average electricity use in Africa today is 620 KWH per capita. For sub-Saharan Africa
without South Africa it was just 153 KWH per capita in 2009 but the world average was
2,730 KWH per capita in 2009 (IRENA, 2012).

Lack of electricity access impairs progress in human welfare and quality of life. Directly or
indirectly, electricity access enables transformative progress in education, health care, access
 18

to water, essential communications and information and access to financial services and
opportunities for income generation. Power supply inadequacy (shortages in generation and
supply) undercuts the productivity of manufacturing and commerce and reduces overall
economic growth (World Bank, 2014).
IEA(2017) states that the challenge of household electrification is less about connectivity at
the global level and more one of supplying rural households with affordable and reliable
power. Sub-Saharan Africa is the only region of the world that will face a connectivity
problem in 2030 and even there the challenge of moving beyond basic energy access is
already emerging.
Ethiopian is endowed with a huge renewable energy potential. However, the country has
managed to develop insignificant amount of its potential. The country has variety of energy
resources including hydro, wind, geothermal, solar and bio-energy. The gross hydro-energy
potential of the country is 45,000MW. The country has also a huge wind and geothermal
energy resource potential estimated about 1,350 GW and more than 7,000 MW respectively
(MoWIE, 2016). From the above energy resources the country commonly used the hydro
energy by constructing different dames.

According to the study of Förch G(1989) Ethiopia is often described as the water tower of
North Eastern Africa. But the country has used only a small amount of the potentials of hydro
energy, wind and geothermal energy because of different factors. The use of insignificant
amount of the country‘s potential affects the availability of electricity for different purpose,
such as lighting, cooking, heating and generating small scale business at household level.

In Ethiopia 33.1% and 23.9% of households have at least one sources of electricity access
through grid and off grid solutions respectively. Only 77.7% of these 57% of households or
nationally 44.3% of Ethiopian households have access to at least basic electricity supply. The
remaining 55.7% of households have no access to any electricity source; rely on dry-cell
batteries or have a grid or off-grid electricity supply that does not provide basic energy service
(ability to light the house and charge phones and available for at least 4 hours a day, including
1 hour in the evening). From these 57% electrified households 5.2% households are receive
less than 4 hours service per day means less than 5 days a month or 60 days a year and half of
the electrified households receive service of 8 hours per day that means 10 days a month or
120 days a year services (WB, 2018).
 19

Generally according to EEPCO (2014/15) reports the number of outages experienced by all
customers in all sectors in Ethiopia averagely 1080 hours per year (equivalent to 45 days per
year). This shows the problem of electricity availability at household level. The problem
affects the day to day activities of the households and changes the energy use of households to
traditional types of energy.

In Hosanna town there is no any kind of research conducted about the analysis of customer
satisfaction on electricity availability and use. Therefore, this study attempts to fill the gap by
conducting an empirical research on the analysis of customers‘ satisfaction on electricity
availability and use in Hosanna town. That is needed to guide policy decisions, device
appropriate interventions and integrated efforts to combat electricity insecurity and lack of
electricity availability.

2.6. Conceptual Framework

A conceptual framework is a hypothesized model that identifies the concepts under study and
their relationships. It presents in a diagrammatic form the way the researcher has
conceptualized the relationship between the independent and dependent variables.Many
factors influence the customer satisfaction with electricity availability and use. Accesses to
electricity and intensity of use by households have their own determinants. The findings of
different studies conducted on customer satisfaction in different parts of the world indicate
different factors that can influence customer satisfaction. It presents in a diagrammatic form
the way the researcher has conceptualized the relationship between the independent and
dependent variables. Based on this assumption the probability of households‘ level of
satisfaction with electricity availability and use is influenced by different factors that can be
grouped into demographic factors, socio-economic factors and institutional factors. These
factors which affect the level of satisfaction, access to electricity and intensity of use are
categorized into demographic, socio-economic, institutional and using factors.

In the previous studies, it has been observed different factors show different signs of
magnitude and direction oncustomer satisfaction, access to electricity and intensity of use.
Based on literature review and empirical studies, a conceptual framework has been formulated
by taking into consideration household heads characteristics (demographic), socio-economic,
institutionaland using factors that could affect customers‘ level of satisfaction with electricity
 20

availability and use in the study area. The diagram of the conceptual framework is shown in
Figure 2 below. The arrows that point to two ways indicate that there is an interaction
between the concepts in both ways. The arrows that are pointing only unidirectional show the
effect is only from one to the other but not the reverse.

Demographic Characteristics

Age

Sex

Family size

Social and economic Institutional Factors

Characteristics
Electric price
Education
Customers‘ level Supply of digital meter
of satisfaction on
Income Cost of digital meter
electricity
availability and
House own Power outage
use

Outcome Factors

Effect of using electric device

Purpose of electric use

Figure 2. Conceptual frame work

Source: Own Design
 21

3. RESEARCH METHODOLOGY

3.1. Description of the Study Area

This study was conducted in Hosanna town, which is the administrative town of Hadiyya zone
in the South Nation Nationalities and People Region of Ethiopia. Hosanna is located at a
distance of about 232 km far away from the capital city of Ethiopia, Addis Ababa via Butajera
to the South direction. It has also 280km and 305 km distance far from Addis Ababa via
Wolkite and Ziway, respectively. Hosanna is also located 168km faraway via Halaba-
Angecha and 203km via Halaba-Durame from Hawassa, the capital city of SNNPR.
Geographically, the town is located at the coordination of (7°34'60" N and 37°52'60" E). The
town was restructured as a town consisting of three sub-towns and eight kebels based on the
region‘s town development strategy adopted in 2004.

Historically, Hosanna town was established in 1904 by Ras Abate who was the governor of
the province of Hadiya and Kambata. He moved his seat from Angecha to the current
Hosanna but Wachemo at that time. Because Wachemo at that time is geographically good for
his military and administrative advantages in 1904.
Currently, according to the development strategy, Hosanna is categorized under the second-
level developed towns of the South Nation, Nationalities and Peoples Region (Hosanna Town
Finance and Economic Development Office, 2021)

Figure . Map of the study area

 22

3.2. Demographic Characteristics

The total population of Hosanna town was estimated to be about 31,701 and 38,294 in 1992
and 2002, respectively (CSA, 1994). Based on the 2014 Census conducted by the CSA,
Hosanna has a total population of 100,531. Out of whom 51011 were men and 49520 were
women (CSA, 2014). Currently, the total population of Hosanna Town is estimated to be
around 112621.Out of the current total population, about 55801(49.5%) are males and the rest
56820 (50.5%) are females (Hosanna Town Finance and Economic Development Office,
2021).

The rapid population growth occurs due to a high fertility rate and high rural-urban migration.
Inter-regional migration and migrating from overseas such as from South Africa and Saudi
Arabia are also other causes of the rapid population growth. On the other hand, electricity
expansion and its availability is far below the population growth unable to give a service for
most of the newly constructed houses in the town but the demand for electricity at the
household level is increasing. Hosanna town has different religious followers among them
Protestants, Orthodox Christians and Muslims are the dominant ones. Concerning the ethnic
groups, Hadiyya, Amhara, Gurage, Silte and Kambata e.t.c are living together and the
majorities are from Hadiyya ethnic group (Ashenafi G, 2015).

3.3. Services and Infrastructures

Hosanna town is among the few towns in the region that have good infrastructure facilities,
such as modern telephone, banking facilities, educational, health and other services. The town
has different social and other services, such as one governmental university, Hospital,
Teachers Training College, Technical and Vocational school and Private colleges,
Standardized Garage Services, Clinics and Laboratories.

3.4. Data Type and Sources

The study used the data collected from both primary and secondary sources to achieve the
above stated objectives. The primary data was collected from selected sample urban
households of Hosanna town. Hence, data on demographic and socioeconomic variables,
access to electricity and intensity of use, satisfaction level and reliability of electricity supply
werecollected from sampled households. Moreover, data from secondary sources that are
 23

relevant to the problem was gathered from various sources such as books, websites, journals,
annual reports, articles and magazines.

3.5. Sample Size Determination and Sampling Techniques

In this study, two-level mixed sampling techniques were employed to select representative
sample households. First, out of 8 kebeles of Hossana town, two kebeles, namely:Jello naramo
and Bobicho that have dense population and electricity access were purposively selected.
Then, after having a list of the total number of households in each sample Kebeles, 384
households (215 from Jello naramo and 169 from Bobicho) were randomly selected using
probability proportional to size technique.

The main reasons for applying a simple random sampling method to select the sampled
households are: (1) the populations in these kebeles are homogenous in terms of socio-
economic characteristics, institutional setup, and livelihood structure in many ways. (2) The
lists of the household heads (sample frame) are always available at kebele leaders. Under
these conditions, using a simple random sampling method is sounder than any other sampling
method.

For this study, Yamane T, (1967) formula was found to be appropriate to determine the
sample size. The reason is that the total population could be known, the population under
study is homogeneous, and simple random sampling is in use to select samples in the kebeles.
Therefore, the sample size was determined using this formula:

N
n
1  N (e 2 )
9600
n
1  9600 (0.05 2 )
 384
Where, n is sample size, N is the total number of households, and e is the desired level of
precision (5%).
 24

Table . Total number of sampled households

Total households Sampled households

Jello naramo 5003 215
Bobicho 4597 169
Total 9600 384

Source: Hossana Town Finance and Economic Development office report (2021)

3.6. Methods of Data collection

Data from the households werecollected using a structured questionnaire. It was designed in
such a way that it provides information on the household head‘s characteristics, such as age,
gender, family size, educational level and socio-economic perspectives like family income,
electricity price, supply and cost of digital meter, types of electrical appliance and house
ownership, outages and others. Questionnaires that werecontained both open-ended and
close-ended types of questions was prepared and distributed to the sampled respondents. The
data collection was administered by enumerators who know the language and culture of the
study area. Moreover, focused group discussions were conducted from the selected
households and other concerned stakeholders to supplement the survey data.

3.7. Methods of Data Analysis

In this study, both descriptive and econometric analytical techniques were used to analyze the
collected data. Descriptive statistics such as tables, ratios, percentages, max, min, standard
deviation and the like was used to describe the relevant aspects of variables and to provide
detailed information about socio-economic and demographic household characteristics. The
study also employed descriptive statics to analyse the customer‘s satisfaction level on
electricity availability and use. Moreover, double hurdle model was used to analyze
households‘ electricity access and intensity of use. The first hurdle of this model is probit
regression to analyze households‘ electricity access and truncation regression to analyze
households‘ intensity of electricity use in the second hurdle.
 25

3.7.1. Econometric specifications

Double-Hurdle Model Specification

In this study, households‘ access to electricity and intensity of electricity use were used as
dependent variables. Those variables are discrete and continuous in nature. The households
that have electricity access were analyzed using a double-hurdle model by taking into account
that all households do not have electricity access. The Double-Hurdle model is a parametric
generalization of the Tobit model, in which the households‘ access to electricity and intensity
of electricity use are determined by two separate stochastic processes. The Tobit model fails
to analyze the factors that will make a sample unit more or less likely willing to get electricity
access. The Double-Hurdle model allows modeling whether households have electricity
access or not and the intensity of electricity use separately.

Its underlying assumption in this setting is that households make two decisions with regard to
their electricity access. The first decision is whether they own electricity access or not. The
second is about the intensity they use, conditional on the first decision. Unlike that of Tobit
model, the Double-Hurdle model allows for the possibility that these two decisions are
affected by a different set of variables.

The Double-Hurdle model has an electricity access (D) equation:

To start with, suppose that there is a latent variable which measures access to electricity of the
i th household and given by:

𝐷𝑖∗ = 𝛼𝑍𝑖 + 𝑢𝑖 1

1 𝑖𝑓 𝐷𝑖 ∗ > 0
𝐷𝑖 = 2
0 𝑖𝑓 𝐷𝑖 ∗ ≤ 0

Where is a latent access variable that takes the value 1 if the household has electricity access
and 0 otherwise, Z is a vector of regressors and owner‘s household characteristics and α is a
vector of parameters; and a level of access (Y) equation:

Yi = Yi∗ if Yi∗ > 0 𝑎𝑛𝑑D∗i > 0

Yi = 0 otherwise 3
Yi∗ = βXi + ui
 26

Where Yi is the observed answer to the open-ended valuation question, X is a vector of the
regressors and owner‘s characteristics and β a vector of parameters.

The decisions of whether to have electricity access and about the intensity of electricity use
(Y) can be jointly modeled provided that the two decisions are made simultaneously.

3.8. Description of Variables

This study considered two perspectives to investigate the determinants of households‘

electricity accessibility and intensity of electricity use and their satisfaction levels on
availability and reliability, which are the socio-economic perspective and the personal
characteristics. The socioeconomic variables are family income, electricity price, types of
electricity devices, house ownership while households‘ characteristics include variables like
age, gender, education, family size, are included in the model to investigate customers level of
satisfaction on electricity availability and reliability and to identify the determinants of
households electricity accessibility and intensity of use.

3.8.1. Dependent variable:

A. Households’ Access to Electricity (HAE) and Intensity of Use: -does the household
have access to electricity services and how much is the expenditure of use?
Electricity is one of the principal energy sources for recreation and social communication,
being used for televisions, computers, DVD players, and audio systems, in addition to more
‗basic‘ forms such as lighting, cooking, washing, cooling and heating (Lin B and Jiang Z,
2012). Then households‘ access to electricity and intensity of electricity use were analyzed by
using a double-hurdle model in this study.
B. Households’ satisfaction level on electricity availability and its supply reliability
(HSLEASR):- is used as a dependent variable of this study. The level of satisfaction on
electricity availability is used only for the households which have electricity access. The
households that have electricity access, but which identifies does the electricity supply to the
household is reliable and available or not for different purpose like lighting, cooking, heating
and generating small business. Then, household‘s satisfaction level on electricity availability
and its reliable supply is analyzed by descriptive statics by using the five Likert scale
measurements by using frequency, percentage, mean, standard deviation and others in this
study.
 27

3.8.2. Independent Variables for Households electricity access and intensity of use:
Age:
The age of the household head in years and it is the continuous independent variable. The age
of household head is an important determinant for the variation in electricity availability.
According to Zhou S &Teng F(2013) studies residential electricity use rises with age of the
households.
Gender: is a dummy variable representing the sex of the household head which is male or
female. Gender is used to identify the maximum and minimum amount of electricity uses and
availability at household level.
Education: is a sequential variable representing level of education of a household head.
Families with higher education have higher electricity consumption than middle or lower
classes (McLoughlinet al., 2012); (Zhou & Teng, 2013)

Family size: is the number of people of any age in the household. Large household sizes are
commonly found in poor households (households with low income), thus large households
will have higher probability of consuming electricity than smaller households.

Family Income: is also another factor which determines the availability level of electricity at
household level. According to the study of O‘Dohertyet al.(2008) income is the explanatory
variable which has a significant impact on electricity consumption. Bélaïd F and
Abderrahmani F(2013), also analyzed the consumption characteristics and indicated that a
causal relationship exists between electricity consumption and GDP in the residential sector.

Price of electricity:is one of the important factors affecting energy use: the fact that there has
a negative relationship between demand and supply of electricity because the demand of
electricity increases price of electricity also increases and vice versa in the supply side. Price
of electricity has insignificant impact on electricity consumption (Chen Y, 2017). According
to the studies of Zhang Y and Peng H(2017) and Rahman S.M and Miah M.D(2017) proposed
that the price of electricity is an important factor which affects electricity consumption.

Supply and cost of digital Meters: Supply and cost of digital meter is one of the problems
for households‘ electricity access in Ethiopia. The Ethiopian electric utility (EEU) have the
shortage of supplying meter of electricity power and which is supplied by high amount of
cost. In this study supply and cost of meter is used as independent variables for households‘
access of electricity and intensity of electricity use.
 28

Amount of Electricity Consumption:

Electricity consumption is the amount of electricity use by households. The amount of
electricity consumption measures by KWH. When the household consumes high amount of
electricity it also pays high amount of price. Then the amount of electricity consumption has
positive relationship with the electricity price.

3.8.3. Independent Variables for Households’ Satisfaction level on electricity availability

Age: is the age of the household head in years and it is the continuous independent variable.
This study will focus on interval between ages. The age of household head is an important
determinant for the variation in electricity availability. According to Zhou S & Teng
F(2013)studies residential electricity use rises with age of the households.
Gender: this is a dummy variable representing the sex of the household head which is male
or female. Gender is used to identify the maximum and minimum amount of electricity uses
and availability at household level.
Education: is a dummy variable representing level of education of a household head.
Families with higher education have higher electricity consumption than middle or lower
classes (McLoughlinet al., 2012); (Zhou S & Teng F, 2013)

Family size: is the number of people of any age in the household. Large household sizes are
commonly found in poor households (households with low income), thus large households
will have higher probability of consuming electricity than smaller households.

Family Income: is also another factor which determines the availability level of electricity at
household level. According to the study of O‘Dohertyet al.(2008) income is the explanatory
variable which has a significant impact on electricity consumption. Bélaïd F and
Abderrahmani F(2013) also analyzed the consumption characteristics and indicated that a
causal relationship exists between electricity consumption and GDP in the residential sector.

Price of electricity:is one of the important factors affecting energy use: the fact that there has
a negative relationship between demand and supply of electricity because the demand of
electricity increases price of electricity also increases and vice versa in the supply side. Price
of electricity has insignificant impact on electricity consumption (Chen Y, 2017). According
to the studies of Zhang Y and Peng H(2017) and Rahman S.M and Miah M.D(2017) proposed
that the price of electricity is an important factor which affects electricity consumption.
 29

Usage of Electric devices: is a well-known fact that more use of electricity device led to
more consumption of electricity. In urban areas, since their income is higher their living
standard is also higher and more luxurious. They indulge for their own satisfaction and
enjoyment. Hence, they use various electronic devices for example TV, phone, music system,
washing machine, cooking machines, refrigerator, and computer and so on. All these devices
have their own contributions on the use of electricity.

House ownership: is a dummy variable which represents 1 for house owners and 0 for
otherwise. Houses which are modern type and traditional types of houses? From these types
of houses modern house is constructed to use different types of devices but the traditional
types of house is not structured like the modern to use different types of devices. Then the
modern types of house is used more amount of electricity.

Times Power Outage: In developing countries, outages are not always caused by shortages
in electricity. In some cases, they are caused by poor quality wiring at the point of use. In
others, they are caused by maintenance requirements, or because a utility staff member is
seeking a bribe. Then outage is one of the variables which affect the customers‘ level of
satisfaction on electricity availability and reliability.

Moreover, explanatory variables that are relevant to this study will be selected on the basis of
the literature and data availability. Hence, more explanatory variables than explained above
will be included in the study. In this study will use descriptive and econometric analytical
techniques. Descriptive statistics will be used to describe relevant aspects of variables and to
provide detailed information about socio-economic and demographic household
characteristics to answer the above listed research questions. The study will also employ
descriptive statics to analyse the customers‘ satisfaction level on electricity availability and
Double-Hurdle model to analyse electricity access and intensity of electricity use separately
electricity access and intensity of electricity use in first hurdle and second hurdle respectively.

Table . Explanatory variables used for electricity access and intensity of use

Name variables for Type of the Expected

electricity access variables effect Description of the variable
Age Continuous + Age of the household head in years
 30

Sex dummy + Gender of the respondents are either

Male 1 or Female 0
Marital Status Categorical +/- The marital condition of households

Education status Categorical/ +/- The education level of the household

sequential head in years/ certification
Family Size Continuous +/- Number of persons with in the home

Monthly Income Continuous +/- Monthly income of households in

ETB
Electricity Price Continuous +/- Monthly price paid for electricity

House Ownership Dummy +/- Households owner of house , if 1

Supply of Digital Meter Categorical
Cost of Digital Meter
Categorical
Times of Power outage interval
household own house and 0 not own
+/- The problem of digital meter supply
+/- The problem of cost of digital meter
+/- Hours of the power outage

Purpose of electric use Nominal +/- Households purpose of using

electricity

4. RESULTS AND DISCUSION

This chapter presents the results of analyzed data obtained from the Jalo naramo and Bobicho
kebelles survey on the town. The study used both descriptive statistics and econometric
techniques to analyze the collected data. In the descriptive analysis, the study analyzed and
discussed the general characteristics of sample households including socio-economic and
 31

demographic characteristics that are expected to affect households‘ satisfaction on electricity

availability in the town. In econometric analysis, double-hurdle model results are analyzed
and discussed the factors that affect the households‘ electricity access and intensity of
electricity use and descriptive statics results are also analyzed and discuss the household‘s
level of satisfaction on electricity availability.

4.1. Descriptive Statistics of Variables Affecting Electricity Access

In general, this chapter presents and analyzes both the primary and secondary data collected
from different institutions related to the objectives of this study. But this subsection also
presents key characteristics of our sample of households, distinguishing between household
characteristics, income variables, households‘ electricity access and intensity of electricity use
and households‘ satisfaction level on electricity availability. Describing the main body of the
data is made using different data presentation techniques such as averages, ratios, tables and
pictures.

4.1.1. Descriptive statistics of continuous variables

The different characteristics of sample households were compared to see if there are
significant differences between electricity access and no electricity access groups. These
include, age of the household head, family size, educational level of household head, and
Monthly Income of households.

Age of household heads:

The respondents were asked to indicate their age in order to establish how the demographic
characteristics of household head affect the electricity access and intensity of electricity use
and the level of satisfaction with electricity availability. The findings showed that respondents
had an average age of about 50 years, which distributed with the minimum age of 29 years to
the maximum of 73 years. Age distribution did not show any significant difference between
electric users and non-users. The average age for electricity users was about 49.7 years while
for those of electricity non-users were about 50.7 years. The statistical test of the mean age
difference showed that there was no statistically significant difference between electricity
access and no electricity access households at the 5% probability level.
 32

Education level of household head:

The mean educational level of the sampled household heads was 3.15 years of schooling,
which distributed with a minimum of 0 schooling year to a maximum of 9 years of schooling.
The average educational level of electricity users was about 3.33 years of schooling whereas
that of non-users was about 2.6 years of schooling. Findings from the statistical test showed
that there was significant difference between electricity users and non-users with regard to
educational level and the difference is statistically significant at the 1% probability level. The
t-value of the educational level is -3.5.

Family Size:

The mean family size of the sampled household heads was 4.81, which ranged with the
minimum size of one individual to the maximum of 10 individuals per a household. The mean
family size of electricity user households was about 4.94 whereas for electricity non-users
were about 4.42. The statistical test of the mean family size of the household heads shows that
there was statistically significant difference between electricity access and no electricity
access households at 5% probability level. Its t-value is -2.2.

Monthly Income of household head:

The mean monthly income of the sampled household heads was 6399.27 ETB, which ranges
between a minimum of 600 birr to a maximum of 25,230.00 birr. The mean monthly income
of electricity user households was 7153.39 ETB (whereas that of non-users was about 3971.17
ETB). The two groups showed a significant difference with regard to monthly income and the
difference is statistically significant at the 1% probability level. This showed that households
who have access to electricity earned more monthly income than households with no access to
electricity, which may help them to reduce the risks of shortage of electricity access and the t-
value of this monthly income of the household head is -5.95.

Table . Descriptive statistics of continuous variables

Electricity access No electricity Total Sample

(293) access (91) (384)
 33

Variables Mean SD Mean SD Mean SD t- value

Age 49.65 11.48 50.65 10.69 49.89 11.29 0.74

Educational 3.33 1.92 2.57 1.4 3.15 1.84 -3.4975*

status
Family size 4.94 1.99 4.42 1.84 4.81 1.97 -2.1956**

Income 7153.39 4790.24 3971.17 3140.44 6399.27 4652.72 -5.9496*

*, ** indicate that the tests are statistically significant at 1 and 5% probability levels,
respectively
Source Own survey 2021

Household Head Gender (Sex)

The respondents were asked to indicate their gender in order to establish how the
demographic characteristics of household head affect the electricity access and intensity of
electricity use and level of satisfaction on electricity availability. Table 4 below shows the sex
distribution of respondents. About 57% of respondents were males while the remaining 43%
were females. This implies that most houses are dominated by male household heads. This
might be because most households in Ethiopia are known to be a male dominated in their
characteristics.

Table . Distribution of sample respondents by sex

Sex Frequency Percent

Female 165 42.97

Male 219 57.03

Total 384 100

Source own survey 2021

Marital Status
The responses of marital information of the households indicated that the majority (71.09%)
and (17.71%) of household head were married and single followed by divorced and widowed
households respectively. But the remaining 7.03% and 4.17% of them were divorced and
widowed respectively. This implies that most of the household head in the study town are
married. The results are shown in Table 5.
 34

Table . Distribution of sample respondents by marital status

Marital Status Frequency Percent Cumulative

Divorced 27 7.03 7.03
Married 173 71.09 78.13
Single 68 17.71 95.83
Widowed 16 4.17 100
Total 384 100
Source own survey 2021.

Educational Status
Above three fourth (93%) of the sample households have attended formal education and are
literate. Respondents having first degree and above, and diploma and certificate constitute
25.10 percent and 13.80 percent of the total sample population, respectively. On the other
hand about 24.5% and 39.6% of respondents attended secondary and primary level of
education, respectively. Only 7.03 percent of the total respondents never attended formal
education but can read and write by attending the informal education. The detail information
on educational level of household heads is shown in Table 6 below.

Table . Distribution of sample respondent‘s educational status

Educational Status Frequency Percent Cumulative

Degree and above 58 15.10 15.10
Diploma and 53 13.80 28.91
certificate
Secondary school 94 24.48 53.39
Primary school 152 39.58 92.97
No school 27 7.03 100
Total 384 100
Sources Own Survey 2021

Households’ house ownership

Out of the total respondents about 55.21% owns house and the remaining 44.8% have no their
own house. The majority (62%) of the respondents replied that they live in modern types of
houses. The remaining 37.8% of the respondents live in traditional types of house. Out of the
total 145 respondents live in traditional house about 20.31 percent households rented from
kebelles and about 7.81 percent also rented from private but the remaining 9.64 percent are
their own houses. Out of the total households live in modern house type about 45.57 percent
are their own houses and 16.67 percent are rented from private but on this survey there is no
 35

modern house rented from kebelles. As my own survey shows the modern types of house is
comfortable for using different types of electric appliance (device).

Table . Household‘s type of houses and the houses household gets

Types of Own house Rented from kebelles Rented from private

house
Frequency Percent Frequency Percent Frequency Percent
Traditional 37 9.64 78 20.31 30 7.81

Modern 175 45.57 0 0 64 16.67

Total 212 55.21 78 20.31 94 24.48
Sources own survey 2021

Households’ occupation

As shown in Table 8, about (34.90%) of the sample respondents were government employees.
The other (20.57%) and (24.22%) of the sample respondents were private employee and
unemployed respectively. But the remaining (11.46%) and (8.87%) of the sample respondents
were pensioned and self-employee respectively. The type of occupation is expected to have an
effect on household‘s electricity access and satisfaction on electricity availability and use.
Hence, a household who has an occupation that have own income enables him to earn more
income will be motivated to spend more on electricity and be encouraged to get good
satisfaction on the electricity availability and use.

Table . Distribution of sample respondent‘s occupation

Occupation Frequency Percent
Government 134 34.9
Pensioned 44 11.46
Private 79 20.57
Self employed 34 8.85
Unemployed 93 24.22
Total 384 100
Sources own survey 2021
 36

4.2. Household’s electricity access and intensity of use

4.2.1. Households’ electricity access and its source

Electricity access is the households‘ opportunity for getting services of electricity from the
center. The households get electricity access from both grids connected or off grid connected
opportunities. The majority (about 65%) of the respondents replied that they get access to
electricity from grid connected whereas about 11.5% of the respondents get access from off
grid connected. The remaining about 23.7% of the respondents does not have any access to
electricity either from grid connected or off grid connected. In general about 76.3 percent of
the respondents have electricity access. Out of them 59.11percent and 17.19 percent gets
electricity access from grid connected and off grid connected, respectively. The respondents
who have electricity access use electricity for different purpose but the remaining 23.7 percent
of the respondents have no electricity access and do not use electricity for any purpose.

Table . Households‘ electricity access and sources

Sources of Have Electricity access

electricity
Yes No
Frequency Percent Frequency Percent
Grid connected 227 59.11 0 0
Off grid 66 17.19 0 0
connected
Total 293 76.30 91 23.70
Own survey 2021

4.2.2. Households’ with electricity access, types of electricity providing process and its
reasons

As shown in Table 10 below, most (70%) of the respondents replied that they have access to
electricity which is provided by the legal supplier. The remaining 30% of respondents replied
that they do not have access to electricity from the legal supplier, but tried to get it informally
from neighbors. Respondents who did not get access to electricity from formal suppliers
pointed out the bureaucratic difficulty (63%) and inability to manage a prepayment demanded
by a suppler (37%) as the main reasons of not accessing electricity from formal supplier.
 37

Table . Electricity providing process and its reasons

Types of Reasons for informally providing electricity services

electricity
service Frequenc Percen Bureaucracy of Shortage of Amount of
providing y t the supplier meters prepayment to
provide electricity

Frequenc Percen Frequenc Percen Frequenc Percen

y t y t y t

Informall 87 29.69 55 63.22 0 0 32 36.78

y
provided
from
neighbor‘
s
Formally 206 70.31
provided
from
supplier
Total 293 100 55 63.22 0 0 32 36.78
Sources own survey 2021

4.2.3. Causes for household’s limited electricity access

Lack of electricity access impairs progress in human welfare and quality of life (WB, 2014).
Directly or indirectly, electricity access enables transformative progress in education, health
care, access to water, essential communications and information, and access to financial
services and opportunities for income generation. Power supply inadequacy (shortages in
generation and supply) undercuts the productivity of manufacturing and commerce and
reduces overall economic growth.

Table 11, below showed that about 40% of the respondents pointed high electricity demand as
the main cause for limited access to electricity whereas about 44% of respondents indicated
low electricity supply as the main cause for limited access to electricity. On the other hand,
about 11% and 5% of the respondents mentioned poor utilization of the available electricity
and preferential distribution as the main causes of limited access to electricity, respectively.
 38

Table . Household‘s causes of limited electricity access

The other causes of such limited electricity Does high electricity demand causes for
access limited electricity access

Yes No
Frequency Percent Frequency Percent
152 39.6 - -
Low electricity supply from the grid/off grid - - 170 44.3
Poor utilization of the available electricity - - 42 10.9
preferential distribution - - 20 5.2
Total 152 39.6 232 60.4

Sources own survey 2021

4.2.4. The average amount of price households paid per month for electricity

Electricity price is one of the main determinants of electricity availability at the household
level. It applies the law of demand that can be stated as the price of electricity increases, the
demand for electricity will decrease and vice versa. Moreover, price also affects electricity
access, as well as electricity availability.

Table . Household‘s average amount of monthly electricity price

Electricity price Frequency Percent

10 – 99 ETB 209 54.4
100 – 199 ETB 44 11.5
200 – 299 ETB 36 9.4
Greater than 300 ETB 4 1
No access 91 23.7
Total 384 100

Sources own survey 2021

As shown in the above table, about 9% of the respondents replied that their average monthly
expense for electricity ranged between 200 and 299 ETB, about 12% mentioned that their
expenditure ranged between 100 and 199 ETB, and about 54% revealed that their monthly
expenditure ranged between 10 and 99 ETB. On the other hand a substantial proportion (24%)
of the respondents replied that they did not have any access to electricity during the survey
period and did not commit any kind of payment for electricity use and very marginal (1%)
 39

proportion of respondents revealed that they paid an average monthly expenditure of more
than 300 ETB for electricity use.

4.2.5. Severity of electricity shortage on a Respondents’ Operations

Respondents were also enquired to give their perception on the level that electricity shortage
affects their operation. Accordingly, the majority (55%) of the respondents perceived that
electricity shortage highly affected their operations while about (41%) perceived that
electricity shortage has a moderate effect on their operations. Marginal (4%) proportion of
respondents understood that electricity shortage did not have any effect in their operations
(Table 13).

Table . The extent of electricity shortage affects the household‘s electricity access

Household’s electricity access affects by Frequency Percent

electricity shortage in the extent of
Highly affected 213 55.5
Moderately affected 157 40.9
No effect 14 3.6
Total 384 100
Source: Own survey 2021

4.2.6. Shortage and high cost of digital meter effects on household’s electricity access

The majority (83%) of respondents replied that shortage and high cost digital meter affected
household‘s access to electricity. About (50%) of them indicated that shortage and high cost
of digital meter have high effects on household‘s access to electricity. About (12%) and
(37%) of respondents revealed that shortage and high cost of digital meter have low and
medium effects on households‘ access to electricity, respectively. On the other hand, about
(17%) of the respondents indicated that shortage and high digital meter do not affect
household‘s access to electricity (Table 14).
 40

Table . Shortage and high cost of digital meter and its effect on household‘s electricity

Shortage and high Extent of affection

cost of digital
meter affects High Medium Low
household‘s Frequency Percent Frequency Percent Frequency Percent
electricity access
Yes 318 162 50.9 117 36.8 39 12.3

No 66
Total 384 162 50.9 117 36.8 39 12.3
Source: Own survey 2021

4.2.7. Electricity consumption per month in KWH

As shown in Table 15 below, about (40%) of respondents replied that their monthly electricity
consumption is less than 50 KWH, whereas another (21%) of the respondents revealed that
their consumption ranged between 51 KWH and 100 KWH. Respondents mentioned
frequently power outage and low electric supply to use it for different electronic devices as
the main reasons of such small electric consumption per month. The other segments of
respondents (14% and 0.5%) replied that their monthly consumption ranged between 101 and
200 KWHs and above 200 KWH, respectively. On the other hand, a substantial portion (24%)
of respondents mentioned that they did not have any access to electricity and are forced to
look for other sources of energy. The mean monthly electricity consumption of the sample
households in the study area was 53.56KWH, which ranged with a minimum consumption of
0 KWH to a maximum of 235KWH.

Table . Household‘s electricity consumption per month in KWH

Household’s monthly average electricity consumption Frequency Percent

Less than 50KWH 155 40.4
51 – 100KWH 82 21.4
101 – 200 KWH 54 14.1
Greater than 200KWH 2 0.5
No access 91 23.7
Total 384 100
Source: Own survey 2021
 41

4.3. Households Level of Satisfaction

4.3.1. Households Level of satisfaction by the availability and use of electricity

About (24%) respondents out of the total sample respondents have no electricity access. As
shown in Table 16 below, the majority (47%) of the respondents who have electric access
replied that they are dissatisfied by the availability and use of electricity whereas about (12%)
of the respondents indicated that they are satisfied by the availability and use of electricity.
On the other hand, about (41%) of the respondents mentioned that they are neither satisfied
nor dissatisfied by the availability and use of electricity. The remaining (24%) of the
respondents were excluded from this perception question as they do not have any access to
electricity. The mean of the customers‘ satisfaction level was about 2.44 and the minimum
and maximum amount of the satisfaction level from availability and use of electricity is 1 and
4 respectively which is allocated in between highly dissatisfied and satisfied. The standard
deviation (the measure of the amount of variation or dispersion) was about 94 percent. This
means it was widely spread.

Table . Household‘s level of satisfaction on electricity availability and use

HLSOEA HD D Neutral S HS Total Mi Max Mean S.D

U (1) (2) (3) (4) (5) n

Frequency 59 80 120 34 0 293 1 4 2.44 0.94

Percent 20.1% 27.3% 41% 11.6% 0 100%

Source own survey 2021

4.3.2. Households use of electricity for different purpose

Respondents were also inquired to point out for what purposes they use electricity in their day
to day activities. Accordingly, the majority (40%) of the respondents replied that they use
electricity only for lighting. On the other hand, about (21%) of the respondents indicated that
they use electricity for lighting and heating whereas the other (9%) of respondents mentioned
that they use electricity for different purposes such as running small business and Lighting,
cooking and heating. The remaining (24%) of the respondents pointed that they do not have
any electricity access.
 42

Table . Use of electricity for different purpose

Purpose of Electric Use Frequency Percent

Generating Small scale business 33 8.59
Light, Cooking and Heating 28 7.29
Light and Cooking 79 20.57
Lighting only 153 39.84
No electric access 91 23.70
Total 384 100
Source own survey 2021

4.3.3. Adequacy of electricity for household’s use

The majority (40%) of the respondents replied that the electricity they were provided is
enough for lighting whereas about (16%) of the respondents indicated that the electricity they
were provided is enough for heating. About (7% and 8%) of the respondents mentioned that
the electricity provided is enough for cooking and running small businesses, respectively. But
the remaining (6.51%) respondents said the electricity we provide is not enough for all
activities. The other (24%) of the respondents pointed that they do not have any electricity
access.

Table . Electricity use is enough for different purpose

Electricity use enough for Frequency Percent

Lighting 153 39.84
Heating 61 15.89
Cooking 25 6.51
Generating small business 29 7.55
Not enough for all 25 6.51
No access of electricity 91 23.70

Total 384 100

Source own survey 2021

4.3.4. Households’ electric appliance and the extent of electricity use

The majority (40%) of the respondents pointed that they do not have any electric appliances in
their home and use electricity only for lighting while about (36%) of the respondents replied
that they have electric appliances in their home. The remaining about (24%) households have
no any access of electricity. Out of the total sample households only (8.07%) households use
the electric appliance equipment all times. About (22.66%) and (5.73%) respectively use the
 43

electric appliance equipment rarely and almost do not use them because of inadequacy of
electricity.

Table . Electric devices equipment and the extent of use

Have Extent of use

Electric
appliance All times Some Almost not
equipment times use
Frequency Percent Frequency Percent Frequency Percent
Yes 140 31 8.07 87 22.66 22 5.73
No 153 0 0 0 0 0 0

No access 91
Total 384 31 8 87 22.66 22 5.73
Source: Own survey 2021

4.3.5. Households’ damages of electric appliance because of voltage fluctuation

In Ethiopia 15.8% of households experience voltage issues such as low or fluctuating service
that limit their use of appliances. The prevalence of voltage issues is similar in rural and urban
areas. Electric appliances generally require a certain voltage supply to operate properly and
low voltage supply tends to result from an overloaded electricity system or from long-distance
low-tension cables connecting spread-out households to a singular grid. Voltage fluctuations
and surges can damage electrical appliances and sometimes result in electrical fires (WB,
2018).

Table . Household‘s electric appliance damage by voltage fluctuation

The damaged electric

appliance in birr Does voltage fluctuation damage electric appliance

Yes No
Frequency Percent Frequency Percent
<5000ETB 69 23.55 51 17.40
5001 – 10000 ETB 81 27.65
10001-20000ETB 55 18.77
>20000ETB 37 12.63
Total 242 82.60 51 17.40
Sources own survey 2021
 44

As shown in Table 20 above; only (17%) of the respondents replied that they did not have any
experience of damage of electric appliance because of the voltage fluctuation whereas the
majority (83%) of the respondents indicated that they had experiences of electric appliances
damage because of voltage fluctuation. The only difference is the amount of electric appliance
damaged by the voltage fluctuation measured in money. Out of these (83%) respondents who
replied about electric appliances damage, about (13% and 46%) mentioned that the damage
estimate is more than 20,000.00 ETB and 5000 – 20000 ETB respectively. But the remaining
(23.55%) replied that the damage estimate is less than 5000 ETB because of the voltage
fluctuation.

4.3.6. Households supply of reliable electricity

The majority (63%) of the respondents who have access to electricity replied that they get
fully unreliable electricity supply. But the remaining about (33% and 4%) of respondents gets
to some extent reliable and highly reliable electricity supply respectively. Therefore the
majority of the customers are far from reliable electricity supply.

Table . Household‘s supply of reliable electricity

Electricity Reliability Frequency Percent

To some extent Reliable 97 33.11
Un reliable 185 63.14
High reliable 11 3.75
Total 293 100
Source: Own survey 2021

4.3.7. Households hours of available electricity supply

Based on the below table shows no one household gets available electricity supply for more
than 20 hours a day. All the households get less than 20 hours a day available electricity
supply in general. Specifically out of the respondents which have electricity access about
(36%) of the respondents replied get available electricity supply for 9 – 12 hours around half
of a day. About (28.67% and 20.82%) of the respondents get 13 -16 hours and 1 -8 hours of
available supply of electricity respectively. But the remaining only (14.68%) of the
respondents get the highest hours of electricity availability for about 17 – 20 hours.
 45

The reasons for the small hours supply of electricity availability are lack of quality of
electricity access, the other reason related with this is technical problems caused by the nature
and man - made factors. Expert‘s performance is other reasons that affect supply of electricity
availability, because the experts of the electricity supplier office have lack of performance and
professional ethics. The other reason is lack of power from the grid. Lack of power from the
grid is affected by the natural environment, because in our country the main sources of
electricity is hydropower then the shortage of rain and others affects supply of power from the
grid. Moreover, these and other reasons affect the supply of electricity availability and
reliability.

Table . Household‘s getting available electricity in terms of hours

Hours of electricity availability Frequency Percent

1 – 8 hours 61 20.82
9 – 12 hours 105 35.84
13 – 16 hours 84 28.67
17 – 20 hours 43 14.68
Total 293 100
Source: Own survey 2021

4.3.8. Households’ demand of electricity

In this study have two types of demand of electricity. These are demand of electricity access
and demand of additional power of electricity, but that have electricity access. Out of the total
respondents, about 24% respondents demanded new electricity access.

Table . Household‘s electricity demand

Demand for additional electric power Frequency Percent

Less than 50 Kwh 128 43.69
51 – 100 Kwh 45 15.36
Greater than 100 Kwh 64 21.84
No need of additional electric power 56 19.11
Total 293 100

Sources: own survey 2021

 46

According to the above table only 19 percent of the respondents which have electricity access
no demand of additional power of electricity. But about 44 percent of the respondents
demands less than 50 KWH additional electric powers. The remaining about 22 percent and
15percentof the respondents demands an additional electric power greater than 100 KWH and
51 – 100 KWH, respectively. Moreover, the supplier of electricity has not supplied enough
power to the household. With the addition of the shortage of power, the supply of electricity
has lack of reliability and availability. But the remaining 24 percent of the total sample
respondents requires the new access of electricity, because with the absence of electricity
access no needs of additional power.

4.3.9. Households times of power outage per day

According to (World Bank, 2018), in Ethiopia Electricity is available at least 23 hours a day;
7 days a week, for 20.9% of households, but 5.2% of grid-connected households receive less
than 4 hours of service per day. About 57.6% of grid-connected households face 4–14 outages
a week, and 2.8% of households face more than 14 outages a week. Reliability of supply is
holding back these grid-connected households from moving to a higher tier for access to
electricity.

Based on the result of this paper out of the total sample respondents in Hossana town, about
(36.20%) respondents 4 – 8 outages occurs per day. The remaining (20%) and (20%)
respondents agrees by the occurrence of outage greater than 8 times and 1- 3 times per day
respectively. But about (24%) of the total respondents totally have no electricity access.

Table . Household‘s Times of power outage per day

Power outage per day Frequency Percent

1 – 3 times 76 19.79
4 – 8 times 139 36.20
Greater than 8 times 78 20.31
No electric access 91 23.70
Total 384 100

Source: own survey 2021

 47

4.3.10. Households alternative sources of energy when electricity is insufficient to

execute daily activities and the purpose of use alternative energy

In Ethiopia 63.3% of households use a three-stone stove as their primary stove, 13.6% use a
self-built stove, 18.2% use a manufactured biomass stove and 4% use a clean fuel stove with
electricity. Cooking with clean fuels such as biogas and liquefied petroleum gas (LPG) is rare
(WB, 2018).

Table . Household‘s alternative source of energy in times of insufficient electricity and the
purpose of using alternative energy

Alternative sources of The Purpose of use of alternative energy

energy
For lighting For cooking and heating
Frequency Percent Frequency Percent
Charcoal - - 192 50
Fire wood - - 81 21.1
Butagas - - 34 8.9
Solar and hand batteries 77 20 - -
Total 77 20 307 80

Source: own survey 2021

As the result of this study shown in the above table, out of the total sample respondents about
(80%) respondents replied Charcoal, Fire wood and Butagas uses for cooking and heating
because of the insufficient access and reliability of electricity. But the remaining (20%) of the
total respondents use Solar and hand batteries for lighting in the absence of electricity.

Out of the total respondents about (24%) respondents have no the access of grid connected
electricity access. Out of the respondents which have electricity access about (63%) electricity
covers less than (50%) of your daily energy use. But the remaining (28%) respondents agree
by electricity covers greater than (50%) of your daily energy use. But the remaining (9%) of
sample respondents never identified the covers of electricity in contrast with daily energy use.

4.3.11. Household’s willingness to pay more for electric use than averagely paid now and
their extent

As indicated on the table below, about (57%) respondents replied needed to pay additional
payment for additional electric power, whereas the remaining (43%) respondents were not
 48

needed to pay more than the average payment. Those households needed to get additional
power but the reason for unwilling additional payment is lack of their income.

As indicated the below table, out of the respondents which needs to pay more than today
average payment about (53%) respondents have the extent of paying (10%) more than the
average payment at present. The remaining (40% and 6.8%)respondents need to pay (25% and
50%) more than the average payment at present respectively. But no anyone respondents have
the extent of additional payment more than 50% of average payment at present.

Table . Household‘s willingness to pay more for electricity use than averagely paid at present
and its extent

The extent of Willingness to pay more for electricity use than you averagely
willingness to pay paid at present
more Yes No
Frequency Percent Frequency Percent
219 57 165 43
10% more 117 53.4 - -
25% more 87 39.7 - -

50% more 15 6.8 - -

75% more - - - -

100% more - - - -

> 100% - - - -

Total 219 100 165 43

Own survey 2021

4.4. Econometric Model Results

This thesis examined the relationship between the dependent variables (access to electricity
and intensity of electricity use) and a variety of independent variables (socioeconomic,
demographic and institutional variables). In the previous section, some determinants of
household‘s access to electricity such as household income, electricity price and other
variables were identified and explained. In this section, the influence of the identified
variables on household‘s access and intensity of use are statistically tested using an
econometric model. Hence, this study provided an empirical analysis of household‘s level of
 49

satisfaction on electricity availability and use using data extracted from the survey conducted
for this purpose. The double hurdle analysis of households selected from Hossana town on
their electricity access and intensity of use is a necessary step in understanding relationship
between households electricity access and consumption behavior.

4.4.1. Double hurdle Model

The results in this study provided insight into the households‘ electricity access and intensity
of use which can be interpreted in terms of two stochastic processes: access and consumption.

4.4.1.1. Factors Determining Access of Electricity

The probit regression part of double hurdle model result reveals that out of the 8 explanatory
variables, four explanatory variables were found significant factors that affected households‘
access to electricity with different significance levels. These variables include household‘s
educational status, family size, income and house own. These variables influence the
electricity access of household positively with different probability levels.

Educational Status of Household head:

Household‘s educational status has a positive effect on household‘s access to electricity and
the coefficient is statistically significant at the 1% probability level. Positive and significant
coefficient of education it means that households with a higher educational level have
considered the benefits of electricity use and have increased their need to get electricity and
have information about the procedures of getting electricity access to their home when
compared with households with a lower educational level.
The marginal effect coefficient of the educational level is positive and significant at the 1%
probability level. The significant marginal effect revealed that keeping other things constant,
an increase of households‘ educational level by one educational category increases
households‘ in probability of access to electricity by (4.56%). In the study area, households
with higher levels of schooling are highly electrified compared with households with lower
educational level, assuming that other variables are kept constant at their average values. This
is because of the hypothesis that households that are more educated analyse the benefit of
electricity use, expedience with regard to cooking, lighting, heating and generating small
business and even including quality of life, compared with the lower educated households.
 50

Family Size:
Family size affected household‘s access to electricity positively and the parameter estimate is
statistically significant at the 5% probability level. Positive and significant coefficient of
family size it means that households with a higher members of family have considered the
benefits of high electricity use and have increased their need to get electricity and electricity
access to their home for different purpose when compared with households with a lower
family size.

The estimated marginal effect of family size, (0.0226), indicates that the probability of
electricity access increases by 2.26% as the family size increases by one person provided that
other things remain constant.

Households’ monthly income:

The monthly household income has positive effect on households‘ electricity access and the
coefficient is statistically significant at 1% probability level. Households with relatively
higher income have more likelihood for access to electricity. Findings of the survey showed
that households who have higher income get electricity access by following the formal
procedure or have the opportunity of getting access through informal procedures with the
electric officials to get digital meter specifically and electricity access generally even to get
reliable electricity.The result also conforms to economic theory which states that income is
positively related to the demand for normal goods such as electricity use.

The marginal effect of coefficient estimated household income has positive sign and a
significant impact on households' electricity access at 1% significance level. The positive and
significant marginal effect of the result revealed that keeping other things constant, an
increase income of the households by 100 birr will increase the probability of household‘s
electricity access increase by 19.02%. The positive effect implies that as households‘ income
increases, households‘ demand for normal and luxurious goods will be increased and the
demand for electricity is observed from such perspective. The result shows that electricity is a
normal good, which implies that households with higher income require more power, and
willing to use more amount of electricity, assuming other things remains constant. This
finding corroborates with the findings of (Abdullah S and Jeanty P. W, 2011), who conclude
that household income has a positive effect on the demand for electricity service in Kenya.
 51

House Ownership:
The other statically significant variable that affected the household‘s access to electricity is
house ownership. It affected household‘s access to electricity positively and the coefficient is
statistically significant at the 5% probability level. This implies that as households probability
of owning their house increases, the probability of their access to electricity also increases and
vice-versa.

The marginal effect households‘ house ownership indicates that as the probability of
households‘ ownership of their houses increases by one percent, the probability of their access
to electricity will be increased by (8.79%), holding other factors constant. This might be
consistent with the fact that in Ethiopian context, house ownership is one of the requirements
that households should fulfill to request a digital meter and get access to electricity connected
to the grid.

Table . Estimated access model part of double hurdle model (Probit part)

Variables Coefficient Robust Z Marginal Effect

Std. err.
Age - 0.0059358 .0072586 -0.82 -0.0016326
Sex 0.0162679 .1532344 0.11 0.0044789
Marital Status -0.1344254 .1080973 -1.24 -0.0369737
Educational 0.1656982* .0471315 3.52 0.0455752
Status
Family Size 0.0821982** .038419 2.14 0.0226086
lnIncome 0.6915142* .1003379 6.89 0.1902008
House Own .3151899** .1582606 1.99 0.0878738
Supply &Cost of -.0253585 .0703213 -0.36 -0.0069749
Digital Meter
Constant -5.492151 1.002225 -5.48
Number of observation = 384

Wald chi2(8) = 72.64

Prob > chi2 = 0.0000
Pseudo R2 = 0.1801
Log pseudo likelihood =-14.770713
*and ** indicates significant at 1% and 5% respectively.

Source: Own survey data, 2021

 52

4.4.1.2. Factors Determining Electricity Intensity of Use (Consumption)

The intensity of electricity use was one of the two dependent variables in this study. It was
specified as truncated part of double hurdle model under methodology part of this study.
Therefore, factors determining the intensity of use of electricity in Hossana town were
analyzed using the truncated part of double hurdle model. The result is presented in Table 28.
Five out of the nine factors that were expected to affect household‘s intensity of electricity use
were found significant determinants of intensity of electricity use. Variables such as marital
status of household head, educational status of the household head and household‘s house
ownership affected intensity of electricity use negatively whereas, household‘s monthly
income and price of electricity affected the intensity of electricity use positively.

Marital status of household head:

The relative scores of the marital status of the respondents were analyzed to ascertain the
probable association between marital status and intensity of electricity use.Household‘s
marital status affected intensity of electricity use negatively and the coefficient is statistically
significant at the 5% probability level. The value of the coefficient of this variable indicates
that an increase the marital status of the household head by one category, leads to decrease in
the proportion of electricity use by the household by 13.4%.

Education level of household head (Education):

The coefficient for education of households is Negative and significantly influences at 1%
statically significant in the intensity of electricity use (consumption). Negative and significant
coefficient of education it means that households with a higher educational level have
considered the benefits of electricity use and have knowledge about advantages of saving of
electric power when compared to households with a lower educational level.
It shows that an increase in the year of schooling of household head by one category, leads to
decrease in the proportion of electricity use by the household by 64.4%. This is in line with
the findings of Tewathia Nidhi(2014) showed a negative and significant relationship between
education and electricity consumption.

Monthly income of household head:

First, the study normalized the monthly income of households by converting the variable in its
natural logarithm form. This variable was found to affect households‘ intensity of electricity
 53

use significantly and positively, and the coefficient is significant at the 10% probability level.
It shows that an increase in the monthly income of household head by one birr leads to an
increase in the proportion of electricity used by (178.8%). The result maintained the economic
theory of demand, which states that income is positively related to a normal good such as
electricity use.

This result confirms with the previous studies of Tewathia Nidhi(2014) who found a similar
result on the positive and significant relationship between household‘s income and electricity
consumption.

House Ownership:
This variable was also found significantly and negatively influencing the intensity of
electricity use by the households at 10% level of significance. The findings of the model
analysis showed that the proportion of electricity used by households decreases by 188.4% for
the discrete change in this variable from 0 to 1 (change from the households head that did not
have their own house to the households have their own house).

Table . Estimation of truncated part of double hurdle model

Variables Coefficient Robust Std. Err. Z

Age 0.0188553 .0532129 0.35
Sex -0.4684812 1.137702 -0.41
Marital Status -1.483933** .7034789 -2.11
Educational Status -0.6442468* .2577753 -2.50
Family Size -0.2393927 .3311098 -0.72
Income 1.788075*** 1.055151 1.69
Electricity Price 0.5073422* .0087166 58.20
House Own -1.884321*** 1.118433 -1.68
Supply and cost of Digital Meter 0.0080265 .4906306 0.02
Constant 17.81002 8.887492 2.00

Limit: lower = 0 Number of Obs = 293

Upper = + Wald chi2(9) =7996.25
Prob > chi2 = 0.0000
Log pseudo likelihood = -1072.2099
*, **, and ***, shows significant at 1%, 5% and 10% respectively

Source: Own estimation from survey data, 2021

 54

4.5. Analysis of the Open Ended Format

After the households‘ were asked closed ended questions through the customer‘s level of
satisfaction on electricity availability and use question, they were asked an open ended
question about the general recommendation to meet electricity access gap and to improve the
low electricity access ratequestion, they were also asked an open ended general
recommendation about intensity of electricity use and to meet electricity availability and
supply reliability. In the open ended question, almost all households‘ were given a response to
meet electricity access gap are:

 Electricity access has been one of the critical challenges for the country‘s
socioeconomic development. Then allocation of high budget for the sector and
avoiding bureaucracy on the sector by the government are the actions to solve the
problems.
 Use alternative sources of power, as we know almost all sources of electricity in our
country is hydro power but using another alternatives like wind, solar, geothermal and
soon has their own values to meet electricity access gap and to improve the low
electricity access rate.
 Privatization or avoiding government monopolization. In our country the electricity
sector is monopolized only by the government. Then avoiding monopolization or
transferring to privatization partially has their values to meet electricity access gap and
to improve the low electricity access rate.

The sampled households‘ which asked open ended questions general recommendations about
intensity of electricity use (electricity consumption) are responses lack of access, availability,
reliability and monthly electric payment are the problems of high amount of electric use
(consumption).

To meet electricity availability and reliability the households responses using alternative
sources of power, allocation of high budget, avoiding bureaucracy in the sector, using quality
materials from the sources of the power up to the user, specialized (trained) human resources
has their values to meet electricity available and reliable. When those and other problems are
solved, that has their own values to improve the customer‘s level of satisfaction on electricity
availability and use in Ethiopia in general and in Hossana town particularly.
 55

4.6. Heckman and Double hurdle model

The Heckman and the double-hurdle models are similar in identifying the rules governing the
discrete (zero or positive) outcomes. Both models recognize that these outcomes are
determined by the selection and level of use decisions. They also permit the possibility of
estimating the first- and second-stage equations using different sets of explanatory variables.

However, the heck it, as opposed to the double-hurdle, assumes that there will be no zero
observations in the second stage once the first-stage selection is passed. In contrast, the
double-hurdle considers the possibility of zero realizations (outcomes) in the second-hurdle
arising from the individuals‘ deliberate choices or random circumstances. This is the main
difference between the two models.

According to appendixes table 3; the result of lamda shows insignificant with the variables.
Then because of this reason using double hurdle model is better than using Heckman model.
 56

5. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1. Summary and Conclusions

Enhancing electricity access is crucial for the socio-economic development and

transformation of a country. The country has been implementing the UEAP to enhance
electricity access since 2005; however, the electricity access is still very low particularly in
rural areas and even partly in urban areas. Electricity access has been one of the critical
challenges for the country‘s socioeconomic development. Therefore, it is very important to
enhance the very low electricity access rate to bring a sustainable socio-economic
development in the country.

The main aim of this paper is to investigate customers‘ satisfaction level on the availability
and use of electricity at household level in general and to identify the factors that determine
both the probability of owning home electricity and those influencing the intensity of use.
Hence, it is necessary to go beyond the typical binary dependent variable methods applied to
cross-sectional surveys. To this end, this study uses the double-hurdle model to address the
issues of electricity access and intensity of electricity use and descriptive statics to measure
the household‘s level of satisfaction on electricity availability and use. In this regard, the
research has two major contributions. First, it identifies the factors that influence electricity
access and use at home. Second, the paper shows that the household‘s level of satisfaction on
electricity availability and use.

The double hurdle model results showed that the use of home electricity follows two
independent decisions: the decision to acquire it and the decision concerning intensity of use
and the descriptive statics measured by Likert scale result show that household‘s level of
satisfaction by using own survey 2021. The estimation results also reveals that the access of
electricity, level of electricity use and level of customers‘ satisfaction from the use of
electricity is mainly determined by respondents‘ demographic characteristics and socio-
economic characteristics like (age, sex, marital status, educational status, family size, income,
Respondent‘s house own, electricity price, supply and cost of digital meter, effect of using
electric device, times of power outage and purpose of electric use).
 57

The results of descriptive statics for level of satisfaction showed that, about (47.4%)
households were dissatisfied and about (41%) households were neutral (neither satisfied nor
dissatisfied) whereas, the remaining only (11.6%) households were satisfied by the use of
electricity. According to the result no one households are highly satisfied by the use of
electricity.

A double hurdle model was employed to analyze the effect of the hypothesized explanatory
variables on households‘ electricity access and intensity of electricity use. However, before
the models were estimated and the marginal effects were interpreted, the problem of sever
Multicollinearity and normality among variables were checked by using VIF and Swilk e,
respectively. Before using double hurdle model Heckman regression model also checked. In
the first hurdle (probit regression) Out of eight (8) variables four (4) variables such as
educational level, family size, household income, and house own positively and significantly
affected the households‘ electricity access.

Additionally in the second hurdle (truncated regression) Out of nine (9) variables five (5)
variables such as marital status, educational level, household income, electricity price and
house own significantly affected the households‘ electricity intensity of use (consumption).
Household‘s educational level, marital status and house own affected the intensity of use
negatively and significant, whereas households‘ income affected the intensity of electricity
use positively and significantly.

In general, the study shows that the majority of the variables under investigation affect the use
level of usage rather than the probability of electricity access. This implies that the amount of
electricity consumption is central in the use of electricity at home.

Based on this observation, it may be possible to draw a preliminarily conclusion that the
access of electricity is probably dominated by the level of use (consumption). This calls for a
further study that addresses the issue of dependence (with electricity usage dominating the
ownership decisions), relaxing the assumption of ―independence‖ used in this study.
 58

5.2. Recommendations

To improve the existing low level of customers‘ satisfaction on electricity availability and use
in Hossana town, SNNPR, Ethiopia the following recommendations have been stated related
to the level of satisfaction, access of electricity and intensity of electricity use in households‘
level.

Based on the findings of the study, the following points are suggested to be considered as
strategic elements in order to increase the improvement of electricity service and households‘
level of satisfaction on electricity availability and use in the study area.

According to the descriptive results of the study only (11.6%) sample respondents are
satisfied but about (47.4%) are dissatisfied and the remaining (41%) are neither satisfied nor
dissatisfied (Neutral). Hence, the majority of the households were dissatisfied by the service
of the electricity sector.

 To improve the level of satisfaction the government in general and the sector in
particular will needs to improve the access and quality of the service and avoid
administrative bureaucracy on the sector.
 The electricity sector in general and electricity access in particular needs an up to date
policy and strategy. Both the energy policy and the strategies of the country focus on
expanding the electricity grid network coverage not on household level electricity
connection. Hence, out of the total sample respondents which have electric access only
about (17.19% and 59.11%) provided electricity from decentralized (off-grid) and grid
connected electrification strategy respectively. But the decentralized (off- grid)
electrification should be given a high attention to provide electricity to the remote
rural areas at a cheaper cost and fastest time line.
 The problem of electricity access and quality of services are the problems for the high
amount consumption (intensity of use) of electricity in the household level. Then to
solve those problems improve the level of electricity access and quality of services
which reaches to the customer.
 The result shows that education of the household head affected electricity access
positively; entailing higher educated headed households were willing get access of
electricity than lower educated (uneducated) headed households. This is due to the fact
 59

that educated headed households have a better access to resources such as uses of
electronics for different services, capital and information than their uneducated
households‘. Therefore, the government and other concerned bodies should give
attention to encourage uneducated household through self-help groups and support
them by creating awareness on the use of electronic materials and use technology for
different development procedures, activities and to use electricity.
 Household incomes were positively and significantly influence the probability of
households‘ electricity access. Hence, concerned bodies have to consider how to
improve the household income in the study area with flexible warranty requirement
that will consider the urban households ability. The incomes of previously one job
persons who now have jobs will add to other job their households‘ incomes to increase
their households‘ more need to get electricity access for heating, cooking, lighting and
generating small scale.
 Household family size was positively and significantly influences the probability of
households‘ willingness to get electricity access. Hence, concerned bodies have to
consider how to improve the household electricity access for the huge number of
family size.
 Households‘ house own has a positive and significantly influences the probability of
households‘ electricity access. The reason behind in study area was, as household
owns house increase the probability of household uses to electricity access was
increases. Therefore, Government and other concerned bodies should consider the
reasonable access for owning house has used as characteristics for electricity access.
 The result shows that education of the household head affected intensity of electricity
(consumption) decision negatively; entailing higher educated headed households were
willing to minimize intensity of electricity use (consumption) than lower educated
(uneducated) headed households.
 The households‘ marital status was negatively and significantly influences the
probability of households‘ intensity of electricity use (consumption). The reason
behind in study area was, as marital status category increase the household intensity of
use to electricity was downfall.
 Household incomes were positively and significantly influence the probability of
households‘ intensity of electricity use. Hence, concerned bodies have to consider how
 60

to improve the household income in the study area with flexible warranty requirement
that will consider the urban households ability. The incomes of previously one job
persons who now have jobs will add to other job their households‘ incomes to increase
their households‘ more consumption of electricity.

 The household‘s house own was negatively and significantly influences the
probability of households‘ intensity of electricity use. Because only few of
household‘s electricity use at all purpose i.e. cooking, heating and generating small
business. Households owns their house uses their own electricity service which means
their own meter gives priority to save electric power or to minimize the intensity of
using electricity than households have no their own house (rented households). The
Government and other concerned bodies should give attention to expand awareness of
the electricity uses.
 61

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7. APPENDIXES

Table 1.Multicollinearity test for the variables

Variable VIF 1/VIF

lnincome 1.61 0.622540
Eprice 1.60 0.623464
House own 1.04 0.961382
SCDM 1.03 0.975523
Educ sts 1.02 0.975935
Mari sts 1.02 0.977423

Sex 1.01 0.990150

Fsize 1.01 0.992262
Age 1.00 0.996411
MeanVIF 1.15

Table 2. Normality test for the variables

Normality test for the variables
Shapiro-Wilk W test for normal data

Variable Obs W V z Prob > z

e 384 0.95985 10.657 5.620 0.00000

 69

Table 3.Test of Heckman selection model -- two-step estimates (regression model with
sample selection

Number of obs = 384

Censored obs = 91
Uncensored obs = 293
Wald chi2(9) = 6127.94
Prob > chi2 = 0.0000
Coef. Std. Err. z P>|z| [95% Conf.
Interval]
Econsu.
age 0.022 0.051 0.435 0.664 -0.078 0.122
sex -0.475 1.125 0.422 0.673 -2.680 1.730
Masts -1.390 0.925 -1.503 0.133 -3.203 -0.423
Edusts -0.738 0.541 1.365 0.172 -1.798 0.322
Fsize -0.292 0.374 -- 0.435 -1.025 0.441
lnincome 1.280 2.596 0.781 0.622 -3.807 6.367
Eprice 0.508 0.008 0.493 0.000 0.492 0.524
House own -2.118 1.611 0.188 -5.275 1.039
SCDM 0.018 0.510 61.799 0.971 -0.981 1.018
_cons 23.115 26.702 -1.315 0.387 - 75.450
0.036 29.220
0.866
eacc
age -0.006 0.007 -0.863 0.388 -0.019 0.008
sex 0.016 0.157 0.103 0.918 -0.292 0.324
masts -0.134 0.107 -1.259 0.208 -0.344 0.075
edusts 0.166 0.052 3.193 0.001 0.064 0.267
Fsize 0.082 0.040 2.050 0.040 0.004 0.161
lnincome 0.692 0.106 6.549 0.000 0.485 0.898
0.315 0.157 2.011 0.044 0.008 0.622
Houseown -0.025 0.071 -0.359 0.720 -0.164 0.113
SCDM -5.492 1.005 -5.464 0.000 -7.462 -3.522
_cons

mills
lambda -1.803 8.519 -0.212 0.832 -18.501 14.894
rho -0.191
sigma 9.461
 70

Table 4. Double hurdle (Probit and Truncated) regression model

probit (eacc age sex masts edusts Fsize lnincome Houseown SCDM, robust)
Fitting comparison equation:
Iteration 0: log pseudo likelihood = -210.26795
Iteration 1: log pseudo likelihood = -173.009
Iteration 2: log pseudo likelihood = -172.40176
Iteration 3: log pseudo likelihood = -172.39953
Iteration 4: log pseudo likelihood = -172.39953
Probit regression Number of obs = 384
Wald chi2(8) = 72.64
Prob > chi2 = 0.0000
Log pseudo likelihood = -172.39953 Pseudo R2 = 0.1801
--------------------------------------------------------------------------------------------------------------
| Coef. Robust
Std. Err. Z P>|z| [95% Conf. Interval]
--------------------------------+-------------------------------------------------------------------------
eacc
age -.0059358 .0072586 -0.82 0.413 -.0201623 .0082907
sex .0162679 .1532344 0.11 0.915 -.284066 .3166019
masts -.1344254 .1080973 -1.24 0.214 -.3462923 .0774415
edusts .1656982 .0471315 3.52 0.000 .0733222 .2580742
Fsize .0821982 .038419 2.14 0.032 .0068984 .1574979
lnincome .6915142 .1003379 6.89 0.000 .4948556 .8881728
House own.3151899 .1582606 1.99 0.046 .0050047 .6253751
SCDM -.0253585 .0703213 -0.36 0.718 -.1631857 .1124687
_cons -5.492151 1.002225 -5.48 0.000 -7.456476 -3.527826
 71

truncreg (Econsu age sex masts edusts Fsize lnincome Eprice Houseown SCDM, robust ll(0)
(note: 91 obs. truncated)
Fitting full model:
Iteration 0: log pseudo likelihood = -1072.2909
Iteration 1: log pseudo likelihood = -1072.21
Iteration 2: log pseudo likelihood = -1072.2099
Iteration 3: log pseudo likelihood = -1072.2099
Truncated regression
Limit: lower = 0 Number of obs = 293
upper = +inf Wald chi2(9) =7996.25
Log pseudo likelihood = -1072.2099 Prob > chi2 = 0.0000
-----------------------------------------------------------------------------------------------------------------

Coef. Robust
Std. Err. z P>|z| [95% Conf. Interval]
---------------------------------------------------------------------------------------------------------------
Econsu
age .0188553 .0532129 0.35 0.723 -.0854401 .1231507
sex -.4684812 1.137702 -0.41 0.681 -2.698337 1.761374
masts -1.483933 .7034789 -2.11 0.035 -2.862726 -.1051397
edusts -.6442468 .2577753 -2.50 0.012 -1.149477 -.1390166
Fsize -.2393927 .3311098 -0.72 0.470 -.888356 .4095706
lnincome 1.788075 1.055151 1.69 0.090 -.2799835 3.856134
Eprice .5073422 .0087166 58.20 0.000 .4902579 .5244264
House own -1.884321 1.118433 -1.68 0.092 -4.076408 .3077669
SCDM .0080265 .4906306 0.02 0.987 -.9535919 .9696448
_cons 17.81002 8.887492 2.00 0.045 .3908599 35.22919
/sigma 9.404258 .6525519 14.41 0.000 8.12528 10.68324
 72

HARAMAYA UNIVERSITY

College Business and Economics

Department of Economics

Questionnaire for Survey study on the analysis of customer satisfaction on electricity

availability and use. A Case Study in Hosanna Town SNNPR of Ethiopia.
The main purpose of this questionnaire is to acquire relevant information for synthesizing a
research entitled ―Analysis of customer satisfaction on electricity availability and use in
Hosanna town, SNNPR of Ethiopia‖. Your response will be of great importance to the
study therefore, you are kindly requested to fill it honestly. I sincerely express my thanks
for your unreserved cooperation in advance. Your information will be strictly confidential.
Instructions

 Don‘t write your name

 Please mark ―a circle‖ for the alternative you choose
 Please be precise on giving the answer as it‗s really helpful for analysis purpose.

Part I: General Information of the Households

1. Household head age. ---------------------------------

2. Gender of Household head. 1) Male 2) Female

3. Marital Status of Household head.

1) Married 2) Single 3) Widowed 4) Divorced 5) separated

4. Household heads educational status.

1) No school attainment 2) Primary education1-8

3) Secondary education 9-12 4) College Diploma and certificate

5. Degree and above

5. Household size (member of peoples living in one family) ---------------

6. Monthly household income (Birr)

1) Less than 1000 Birr 3) between 5001 and 8000 Birr

2) Between 1001 and 5000 Birr 4) above 8000 Birr

 73

7. Ownership of the house in which you live

1) Own house 3) Rented from private owner

2) Rented from kebelles 4) if other specify--------------------

-

8. What type of house you live? 1) Traditional 2) Modern

9. Occupational status of the household head

1) Government employees 3) Private employees

2) Pensioned 4) Self employee

5) Unemployed

Part II: Household electricity access, intensity of use, and satisfaction level

10. Do you have electricity access? 1) Yes 2) No

11. If your answer for question number 10 is yes, what is the household‘s source of electricity
access? 1) Grid connected 2) off grid

12. Which electricity services provide shortly or actively to the household?

1) Formally provided from the supplier 2) informally provided from neighbors

13. If your answer for question number 12 is ―informally provided‖, what is the reason?

1) Bureaucracy of the supplier 3) amount of payment at the initial period

2) Shortage of meters 4) if others specify-------

14. Do you have electric appliance equipment in your house?

1) Yes 2) No

15. If your answer for question number 14 is “Yes” to what extent you use?

1) All times 2) Sometimes 3) Almost not use?

16. For what purpose does the family use electricity?

1) Lighting only 3) Lighting, cooking and Heating

2) Lighting and cooking 4) generating small scale business

5) other: please specify________________________________

 74

17. The electricity you use is enough for? More than one answer is possible

1) Lighting 3) Cooking

2) Heating 4) generating small scale business

5) Any other: please specify_________________________

18. To what extent are you satisfied by the availability and use of electricity?

1) Highly dissatisfied 4) Satisfied

2) Dissatisfied 5) Highly satisfied

3) Neutral (neither satisfied nor dissatisfied)

19. What is the average amount of households‘ electricity consumption per month in Kwh
______________?

20. The average amount of price you paid per month for electricity.__________________

21. To what extent electricity shortage affects the household‘s electricity access?

1) Highly affected 2) Moderately affected 3) No effect

22) Do you believe that high demand for electricity is the cause for limited electricity access
for each household?

1) Yes 2) No

23. If your answer for question 22 is no, what is the main causes of such limited access?

1) Low electricity supply from the grid/off grid 3) preferential distribution

2) Poor utilization of the available electricity 4) other: please specify_____________

24. Does shortage and high cost of digital meter affects household‘s electricity access?

1) Yes 2) No

25. If your answer for question number 24 is ―Yes‖ to what extent?

1) Highly 2) Medium 3) Low

26. To what extent electricity supply is reliable in your home?

1) Highly reliable 2) To some extent reliable 3) Unreliable

 75

27. How many hours electricity supply is available in the household per day?

1) Below 5 hrs 3) 11 – 16 hrs

2) 6 – 10 hrs 4) Above 16 hrs

28. What are the reasons for small hours supply of electricity available?

1) Quality 2) Technical problem 3) Experts performance

4) Lack of electricity generation 5) other: please specify__________________

29. Have experienced that voltage fluctuations damage your electric appliance?

1) Yes 2) No

30. If your answer for question number 29 is ―yes‖, how much does it cost you to repair or
replace the damaged appliance in birr?

1) < 5000 2) 5001 – 10000 3) 1001 – 20000 4) > 20000

31. Do you need additional power of electricity to use for different purpose?

1) Yes 2) No

32. If your answer for question number 31 is ―Yes‖, how many additional kWh is demanded
per month? ---------

1) Less than 50kwh 2) 51 – 100Kwh

3) Greater than 100kwh 4) No need of additional power

33. How many times power outages are occurring in the households per day?

1) 1-3 times 2) 4-8 times 3) above 8 times 4) Not occurred

34. If electricity is not sufficient to execute your daily activities, what other alternative
sources do you use?

1) Kerosene 3) butagas 5) dung cake

2) Charcoal 4) fire wood 6) other: please specify______________

35. If you selected any one of the alternatives mentioned in question 34, for what purpose do
you use it? 1) for lighting 2) for cooking 3) for heating 4) other: please
specify________
 76

36. On average how much percent of your daily energy use is covered by
electricity?______________

37. If there is a plan to improve access and electricity supply improvement, are you willing to
pay more for electric use than what you averagely paid? 1) Yes 2) no

38. If your answer for question 37 is yes, to what extent you are willing to pay more?

1) 10% more of the present payment 3) 50% more

2) 25% more of the present payment 4) 75% more

5) 100% more 6) any other: please specify___________

39. What is your general recommendation to meet electricity access gap?

40. What do you recommend to improve the low electricity access rate in the country?

41. What is your general recommendation about intensity of electricity use?

42. What is your general recommendation to meet electricity availability and supply
reliability?