On the measurement and quantification of electricity affordability in the commercial and industrial sectors – A cost burden approach

This paper proposes a novel method to quantifying the affordability of electricity from the perspective of commercial and industrial establishments. While there is a prolific amount of literature on the quantification of electricity affordability from a household’s perspective, there has been no known attempt to quantify affordability from the perspective of the firm. This paper addresses this gap in the literature by proposing a methodology for quantifying electricity affordability that is aligned with the definition of affordability as laid out in the grid modernization literature and is also derived from the principles of profit maximization of a firm. A demonstration of the effectiveness of this methodology was carried out by its application to publicly available data sets covering different sectors and to firms within those sectors. This simple, yet effective tool will allow policy makers to identify disadvantaged sectors (by city and state) and design policy more effectively so as to benefit them.