An Exploratory Factor Analysis (EFA) for Developing and Validating a Scale of Public Acceptance on Willingness to Pay (PAWP) Maximum Demand (MD) Charge in Malaysia

Implementation of residential Maximum Demand (MD) charges is desirable among utilities and regulators to establish a ratemaking framework that will better reflect the cost of generating and delivering electricity. The objective of this paper is to develop and validate public acceptance on willingness to pay (PAWP) MD charge in Malaysia. The items of this newly developed scale were derived from previous published quantitative studies. Validity and reliability of the PAWP on MD charge were assessed using exploratory factor analysis (EFA). 154 respondents participated in this study. Descriptive statistics and EFA were used to determine validity of the PAWP on MD charge. Cronbach's alpha and item analysis verified the reliability of PAWP on MD charge. The determinants of willingness to pay comprised four factors with 30 items for PAWP on MD charge in their monthly electricity bill. Findings from this study indicate that the EFA provide an imperative result that questionnaire such PAWP scales has appropriate and adequate construct validity and reliability to use as a measurement instrument in obtaining the data from target respondents for this study.