This paper proposes an empirical analysis concerning the cost of unserved energy (CUE) or value of lost load in agriculture and industrial sectors and provides insights that can provide useful inputs in designing effective policies for the power sector. About 500 manufacturing units and 900 farmers were surveyed in the south Indian state of Karnataka using a two-stage random sampling to provide interval estimates of CUE for the industrial and agricultural consumers. The results from the survey help in providing guidance on consumer perceptions and their willingness to pay different or higher tariffs. The estimated economic loss due to power outage in the agriculture sector varies from 1.9% to 3.6% of total State Domestic Product (SDP), i.e., Rs 950 billion at 1999/2000 prices, while in industry, the economic loss varies between 0.04% and 0.17% of total SDP depending upon the size of industry during the study period in 1999. (c) 2005 Elsevier Ltd. All rights reserved.