8 available to pay for electricity. Imputed values are also assigned to items other than food, such as collected firewood. However, separating cash expenditure on food from imputed values was considered adequate for the purpose of assessing affordability of electricity among low‐income households, because by far the greatest share of non‐cash expenditures is food consumption, the share of which increases with decreasing income.

To examine the affordability of grid electricity, monthly consumption corresponding to tiers 3–5 in the multi‐ tier matrix for access to household electricity supply was taken—30 kWh, 100 kWh, and 250 kWh, respectively—and corresponding electricity bills were computed. The bills are inclusive of energy charges, fixed charges, other charges (such as a rural electrification fund fee), and applicable value‐added tax (VAT) and any other tax. They do not include charges unrelated to electricity use (specifically public television and radio license fee) even if they are always added to every residential electricity bill. In addition, 50 kWh a month was considered for comparison with the AICD and because several countries set 50 kWh as the cap on highly subsidized lifeline rates.

The monthly electricity bills for these amounts were then expressed as shares of total household expenditures for all households, whether or not they were connected to the grid. The multi‐tier access framework defines electricity as being affordable if households spend less than 5 percent of total expenditures on monthly consumption of 30 kWh. This paper similarly considers grid electricity to be unaffordable if a household has to spend more than 5 percent of its total expenditures on electricity. As part of the broader study, detailed information on the tariff schedule in effect in July 2014 was collected in 39 countries, including all the 22 countries with household survey data. In many countries, more than one schedule existed, and the least‐cost option was taken for the purpose of examining affordability. If the survey was undertaken when a different tariff schedule was in effect, then monthly nominal per capita expenditures were increased at the same rate as nominal per capita GDP in local currency to the year when the tariffs prevailing in July 2014 first came into effect and total household expenditures were then computed from the adjusted per capita expenditure. If the tariff schedule in effect in July 2014 had been first introduced before the survey date, no adjustment of expenditure was necessary—Burkina Faso, Ethiopia, Mali, Mozambique, Senegal, Sierra Leone, and Togo fell under this category and did not require any adjustment to total household expenditures. Connection charges were available for all but Mali and São Tomé and Príncipe. They were computed as multiples of total monthly household expenditures. If information on when the connection charges came into effect was not available, the dates of effectiveness were assumed to be the same as those for tariff schedules (see Table A.8 in the annex for more detail).

This paper computes the poverty gap for grid electricity in the same way the poverty gap is defined in economics as follows: where the required monthly payment is the monthly bill inclusive of taxes and other charges that a household has to pay to consume the corresponding amount of electricity, P is the total population living in households for whom the monthly payment exceeds 5 percent of their total monthly household expenditures (inclusive of freely acquired food and other items), and N is the total population of the country. Where the monthly electricity bill exceeds the 5‐percent share, electricity is deemed unaffordable, and the degree of unaffordability for a household is the size of the gap between the bill and the 5‐percent share when this is positive, zero otherwise. Although monthly consumption of 30 kWh is the basis for defining affordability, the poverty gap is also computed for 50, 100 (multi‐tier framework tier 4), and 250 kWh (multi‐ tier framework tier 5) a month to see how many people can afford higher consumption. For these