Abstract
Efficiency and productivity analysis is a standard part of the tool-box of electricity and gas network regulators. In this paper the data envelopment analysis approach to benchmarking the performance of electricity networks is applied to a group of regional networks which differ in the quality of supply measured by, for example, interruptions. We show that efficiency comparisons differ when quality of supply is allowed for. We extend the efficiency comparisons to construct quality-adjusted Malmquist productivity indices in a manner which can be employed in both intra-firm management review and in regulatory benchmarking.
Keywords
References
- Bagdadioglu, N., C. Waddams Price, and T.G. Weyman-Jones (2007), “Measuring Potential Gains from Mergers among Electricity Distribution Companies in Turkey using a Non-parametric Model”, The Energy Journal, 28, 2, 83-110.
- Burns, Phil, Cloda Jenkins and Thomas Weyman-Jones (2006), “Information Revelation and Incentives”, in: Michael Crew and David Parker (eds.) International Handbook of Regulation, Edward Elgar, Cheltenham.
- Coelli, T.J., A. Estache, S. Perelman and Lourdes Trujillo (2003), A Primer on Efficiency Measurement for Utilities and Transport Regulators, Washington, World Bank Institute.
- Fare, R., S. Grosskopf, M. Norris and Z. Zhang (1994), “Productivity Growth, Technical Progess and Efficiency Change in Industrialized Countries”, American Economic Review, 84, 66-83.
- Fried, Harold O., C.A. Knox Lovell and Shelton S. Schmidt (2007), “Efficiency and Productivity”, in: Harold O. Fried, C.A. Knox Lovell and Shelton S. Schmidt (eds.) The Measurement of Productive Efficiency and Productivity Growth, Oxford, Oxford University Press.
- Giannakis Dimitrios, Tooraj Jamasb, Michael Pollitt (2005), “Benchmarking and incentive regulation of quality of service: an application to the UK electgricity distribution networks”, Energy Policy, Volume 33, Issue 17, November, 2256-2271.
- Growitsch, Christian, T. Jamasb and M. Pollitt (2009), “Quality of Service, Efficiency, and Scale in Network Industries: An Analysis of European Electricity Distribution”, Applied Economics, Vol. 41 (20), 2555-2570.
- Jamasb, T., and M. Pollitt (2001), “Benchmarking and Regulation: international electricity experience”, Utilities Policy, 9, 3, 107-30.
- Langset T. (2001), Quality dependent revenues – incentive regulation of quality of supply, Oslo, The Norwegian Water Resources and Energy Directorate, (NVE).
- Ray, Subhash C. (2004), Data Envelopment Analysis: theory and techniques for economics and operations research, Cambridge, Cambridge University Press.
- Scheel, H. (2001), “Undesirable Outputs in Efficiency Evaluations”, European Journal of Operational Research, 132, 2, 400-10.
Abstract
Efficiency and productivity analysis is a standard part of the tool-box of electricity and gas network regulators. In this paper the data envelopment analysis approach to benchmarking the performance of electricity networks is applied to a group of regional networks which differ in the quality of supply measured by, for example, interruptions. We show that efficiency comparisons differ when quality of supply is allowed for. We extend the efficiency comparisons to construct quality-adjusted Malmquist productivity indices in a manner which can be employed in both intra-firm management review and in regulatory benchmarking.
Keywords
References
- Bagdadioglu, N., C. Waddams Price, and T.G. Weyman-Jones (2007), “Measuring Potential Gains from Mergers among Electricity Distribution Companies in Turkey using a Non-parametric Model”, The Energy Journal, 28, 2, 83-110.
- Burns, Phil, Cloda Jenkins and Thomas Weyman-Jones (2006), “Information Revelation and Incentives”, in: Michael Crew and David Parker (eds.) International Handbook of Regulation, Edward Elgar, Cheltenham.
- Coelli, T.J., A. Estache, S. Perelman and Lourdes Trujillo (2003), A Primer on Efficiency Measurement for Utilities and Transport Regulators, Washington, World Bank Institute.
- Fare, R., S. Grosskopf, M. Norris and Z. Zhang (1994), “Productivity Growth, Technical Progess and Efficiency Change in Industrialized Countries”, American Economic Review, 84, 66-83.
- Fried, Harold O., C.A. Knox Lovell and Shelton S. Schmidt (2007), “Efficiency and Productivity”, in: Harold O. Fried, C.A. Knox Lovell and Shelton S. Schmidt (eds.) The Measurement of Productive Efficiency and Productivity Growth, Oxford, Oxford University Press.
- Giannakis Dimitrios, Tooraj Jamasb, Michael Pollitt (2005), “Benchmarking and incentive regulation of quality of service: an application to the UK electgricity distribution networks”, Energy Policy, Volume 33, Issue 17, November, 2256-2271.
- Growitsch, Christian, T. Jamasb and M. Pollitt (2009), “Quality of Service, Efficiency, and Scale in Network Industries: An Analysis of European Electricity Distribution”, Applied Economics, Vol. 41 (20), 2555-2570.
- Jamasb, T., and M. Pollitt (2001), “Benchmarking and Regulation: international electricity experience”, Utilities Policy, 9, 3, 107-30.
- Langset T. (2001), Quality dependent revenues – incentive regulation of quality of supply, Oslo, The Norwegian Water Resources and Energy Directorate, (NVE).
- Ray, Subhash C. (2004), Data Envelopment Analysis: theory and techniques for economics and operations research, Cambridge, Cambridge University Press.
- Scheel, H. (2001), “Undesirable Outputs in Efficiency Evaluations”, European Journal of Operational Research, 132, 2, 400-10.
Details
| Primary Language | English |
|---|---|
| Journal Section | Articles |
| Authors | |
| Publication Date | September 1, 2010 |
| Submission Date | December 12, 2014 |
| Published in Issue | Year 2010 Volume: 12 Issue: 12 |
