Consumer’s Perception Towards Electricity Theft; A Path Analysis

Abstract

Electricity theft is a chronic issue that weakens the electricity supply system. Energy worth billions of dollars is stolen annually from electricity grids and the extent of theft is higher in the developing countries. The problem is treated as a technical one and generally technical solutions are considered. This study highlights the socio-economic factors that are involved in escalating electricity theft situation in the Islamabad Electric Supply Company, Pakistan. The study examines the factors that facilitate the illegal consumption of electricity. The factors are analyzed using the path analysis by employing a measurement model in AMOS. The study is based on primary data set of 330 observations, collected through a structured questionnaire from the twin cities of Islamabad and Rawalpindi; the results are based on the perception of the consumers. The variables that are examined in this study include bribery payments, load shedding and electricity theft, quality of conduct of the utility officials, probability of detection, electricity tariff rate, rule of law, and household profile. It is found that corruption diluting deterrence load shedding, and age are statistically significant in affecting electricity theft; However, the role of tariff rate in motivating consumers to steal electricity is insignificant. The study suggests that controlling corruption and improving the reliability of electricity supply can ameliorate the current situation by reducing the extent of electricity theft.