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Electricity Distribution in the UK and Japan: A Comparative Efficiency Analysis 1985-1998

Author

Listed:
  • Toru Hattori
  • Tooraj Jamasb
  • Michael Pollitt

Abstract

This paper examines the relative performance of electricity distribution systems in the UK and Japan between 1985 and 1998 using cost-based benchmarking with data envelopment analysis (DEA) and stochastic frontier analysis (SFA) methods. The results suggest that the productivity gain in the UK electricity distribution has been larger than in the Japanese sector. In particular, productivity growth accelerated during the last years when the UK utilities were operating under tightened revenue caps. It also suggests that efficiency scores are higher for UK utilities. The findings also highlight the advantages of using multiple techniques in comparative analysis and in incentive regulation.

Suggested Citation

  • Toru Hattori & Tooraj Jamasb & Michael Pollitt, 2005. "Electricity Distribution in the UK and Japan: A Comparative Efficiency Analysis 1985-1998," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 23-48.
    • Handle: RePEc:aen:journl:2005v26-02-a02
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    Citations

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    Cited by:

    1. Christian Growitsch & Tooraj Jamasb & Michael Pollitt, 2009. "Quality of service, efficiency and scale in network industries: an analysis of European electricity distribution," Applied Economics, Taylor & Francis Journals, vol. 41(20), pages 2555-2570.
    2. Ramos-Real, Francisco Javier & Tovar, Beatriz & Iootty, Mariana & de Almeida, Edmar Fagundes & Pinto Jr., Helder Queiroz, 2009. "The evolution and main determinants of productivity in Brazilian electricity distribution 1998-2005: An empirical analysis," Energy Economics, Elsevier, vol. 31(2), pages 298-305, March.
    3. Ajayi, Victor & Anaya, Karim & Pollitt, Michael, 2022. "Incentive regulation, productivity growth and environmental effects: the case of electricity networks in Great Britain," Energy Economics, Elsevier, vol. 115(C).
    4. Monastyrenko, Evgenii, 2017. "Eco-efficiency outcomes of mergers and acquisitions in the European electricity industry," Energy Policy, Elsevier, vol. 107(C), pages 258-277.
    5. John Kwoka & Michael Pollitt & Sanem Sergici, 2010. "Divestiture policy and operating efficiency in U.S. electric power distribution," Journal of Regulatory Economics, Springer, vol. 38(1), pages 86-109, August.
    6. Aldea, Anamaria & Ciobanu, Anamaria & Stancu, Ion, 2012. "The Renewable Energy Development: A Nonparametric Efficiency Analysis," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 5-19, March.
    7. Brown, David P. & Sappington, David E. M., 2023. "Designing Incentive Regulation in the Electricity Sector," Working Papers 2023-10, University of Alberta, Department of Economics.
    8. Capece, Guendalina & Costa, Roberta & Di Pillo, Francesca, 2021. "Benchmarking the efficiency of natural gas distribution utilities in Italy considering size, ownership, and maturity," Utilities Policy, Elsevier, vol. 72(C).
    9. Li, Hong-Zhou & Kopsakangas-Savolainen, Maria & Xiao, Xing-Zhi & Lau, Sim-Yee, 2017. "Have regulatory reforms improved the efficiency levels of the Japanese electricity distribution sector? A cost metafrontier-based analysis," Energy Policy, Elsevier, vol. 108(C), pages 606-616.
    10. S P Santos & C A F Amado & J R Rosado, 2011. "Formative evaluation of electricity distribution utilities using data envelopment analysis," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(7), pages 1298-1319, July.
    11. Xie, Bai-Chen & Shang, Li-Feng & Yang, Si-Bo & Yi, Bo-Wen, 2014. "Dynamic environmental efficiency evaluation of electric power industries: Evidence from OECD (Organization for Economic Cooperation and Development) and BRIC (Brazil, Russia, India and China) countrie," Energy, Elsevier, vol. 74(C), pages 147-157.
    12. Bai-Chen, Xie & Ying, Fan & Qian-Qian, Qu, 2012. "Does generation form influence environmental efficiency performance? An analysis of China’s power system," Applied Energy, Elsevier, vol. 96(C), pages 261-271.
    13. Tsutsui, Miki & Goto, Mika, 2009. "A multi-division efficiency evaluation of U.S. electric power companies using a weighted slacks-based measure," Socio-Economic Planning Sciences, Elsevier, vol. 43(3), pages 201-208, September.
    14. Dimitri Dimitropoulos and Adonis Yatchew, 2017. "Is Productivity Growth in Electricity Distribution Negative? An Empirical Analysis Using Ontario Data," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    15. Astrid Cullmann & Christian Hirschhausen, 2008. "Efficiency analysis of East European electricity distribution in transition: legacy of the past?," Journal of Productivity Analysis, Springer, vol. 29(2), pages 155-167, April.
    16. Tovar, Beatriz & Javier Ramos-Real, Francisco & de Almeida, Edmar Fagundes, 2011. "Firm size and productivity. Evidence from the electricity distribution industry in Brazil," Energy Policy, Elsevier, vol. 39(2), pages 826-833, February.
    17. Ralph Sonenshine, 2016. "Effect of Utility Deregulation and Mergers on Consumer Welfare," Working Papers 2016-08, American University, Department of Economics.
    18. Jamasb, Tooraj & Pollitt, Michael, 2007. "Incentive regulation of electricity distribution networks: Lessons of experience from Britain," Energy Policy, Elsevier, vol. 35(12), pages 6163-6187, December.
    19. Pompei, Fabrizio, 2013. "Heterogeneous effects of regulation on the efficiency of the electricity industry across European Union countries," Energy Economics, Elsevier, vol. 40(C), pages 569-585.
    20. Ajayi, Victor & Weyman-Jones, Thomas & Glass, Anthony, 2017. "Cost efficiency and electricity market structure: A case study of OECD countries," Energy Economics, Elsevier, vol. 65(C), pages 283-291.
    21. Nakano, Makiko & Managi, Shunsuke, 2008. "Regulatory reforms and productivity: An empirical analysis of the Japanese electricity industry," Energy Policy, Elsevier, vol. 36(1), pages 201-209, January.
    22. Liu, Junqing & Fukushige, Mototsugu, 2020. "Efficiency and pricing of water supply and sewerage services in Japan," Utilities Policy, Elsevier, vol. 62(C).
    23. Barros, Carlos Pestana & Managi, Shunsuke, 2009. "Regulation, pollution and heterogeneity in Japanese steam power generation companies," Energy Policy, Elsevier, vol. 37(8), pages 3109-3114, August.
    24. Zhou, P. & Ang, B.W. & Poh, K.L., 2008. "A survey of data envelopment analysis in energy and environmental studies," European Journal of Operational Research, Elsevier, vol. 189(1), pages 1-18, August.

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    JEL classification:

    • F0 - International Economics - - General

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