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Efficiency Analysis of Energy Networks : An International Survey of Regulators

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  • Brophy Haney, A.
  • Pollitt, M.G.

Abstract

Incentive regulation for networks has been an important part of the reform agenda in a number of countries. As part of this regulatory process, incentives are put in place to improve the cost efficiency of network companies by rewarding good performance relative to a predefined benchmark. The techniques used to establish benchmarks are central to the efficiency improvements that are ultimately achieved. Much experience has been gained internationally in the application of benchmarking techniques and we now have a solid understanding of the main indicators of best practice. These include the use of frontier-based methods; a large and high quality dataset; panel data; and bootstrapping techniques. What we are lacking is a more complete understanding of the factors that influence choice of methods by regulators, i.e. characteristics that may encourage or discourage regulators to adopt best practice methods.

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Bibliographic Info

Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0926.

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Date of creation: 09 Jun 2009
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Handle: RePEc:cam:camdae:0926

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Web page: http://www.econ.cam.ac.uk/index.htm

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Keywords: Electricity; Gas; Benchmarking; Efficiency analysis; Incentive regulation; Energy networks;

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References

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  2. repec:reg:wpaper:255 is not listed on IDEAS
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  4. Jamasb, T. & Pollitt, M., 2007. "Incentive Regulation of Electricity Distribution Networks: Lessons of Experience from Britain," Cambridge Working Papers in Economics 0709, Faculty of Economics, University of Cambridge.
  5. Dani Rodrik, 2008. "Second-Best Institutions," NBER Working Papers 14050, National Bureau of Economic Research, Inc.
  6. Giannakis, Dimitrios & Jamasb, Tooraj & Pollitt, Michael, 2005. "Benchmarking and incentive regulation of quality of service: an application to the UK electricity distribution networks," Energy Policy, Elsevier, vol. 33(17), pages 2256-2271, November.
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  8. Preetum Domah & Pollitt, M.G. & Jon Stern, 2002. "Modelling the Costs of Electricity Regulation: Evidence of Human Resource Constraints in Developing Countries," Cambridge Working Papers in Economics 0229, Faculty of Economics, University of Cambridge.
  9. Jamasb, T. & Pollitt, M., 2000. "Benchmarking and regulation: international electricity experience," Utilities Policy, Elsevier, vol. 9(3), pages 107-130, September.
  10. Pollitt, M.G. & Stern, J., 2009. "Human Resource Constraints for Electricity Regulation in Developing Countries: Has Anything Changed?," Cambridge Working Papers in Economics 0914, Faculty of Economics, University of Cambridge.
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  12. Cook, Wade D. & Seiford, Larry M., 2009. "Data envelopment analysis (DEA) - Thirty years on," European Journal of Operational Research, Elsevier, vol. 192(1), pages 1-17, January.
  13. Michael G. Pollitt, 2008. "The Future of Electricity (and Gas) Regulation in a Low-carbon Policy World," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 63-94.
  14. Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2007. "Benchmarking and Regulation in the Electricity Distribution Sector," CEPE Working paper series 07-54, CEPE Center for Energy Policy and Economics, ETH Zurich.
  15. Yu, William & Jamasb, Tooraj & Pollitt, Michael, 2009. "Does weather explain cost and quality performance? An analysis of UK electricity distribution companies," Energy Policy, Elsevier, vol. 37(11), pages 4177-4188, November.
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Citations

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Cited by:
  1. Agrell, Per J. & Niknazar, Pooria, 2014. "Structural and behavioral robustness in applied best-practice regulation," Socio-Economic Planning Sciences, Elsevier, vol. 48(1), pages 89-103.
  2. AGRELL, Per & FARSI, Mehdi & FILIPPINI, Massimo & KOLLER, Martin, 2013. "Unobserved heterogeneous effects in the cost efficiency analysis of electricity distribution systems," CORE Discussion Papers 2013003, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Mark Andor & Frederik Hesse, . "The StoNED age: The Departure Into a New Era of Efficiency Analysis? An MC study Comparing StoNED and the "Oldies" (SFA and DEA)," Working Papers 201285, Institute of Spatial and Housing Economics, Munster Universitary.
  4. Rabindra Nepal & Flavio Menezes & Tooraj Jamasb, 2014. "Network Regulation and Regulatory Institutional Reform: Revisiting the Case of Australia," Discussion Papers Series 510, School of Economics, University of Queensland, Australia.
  5. J-M- Glachant & H. Khalfallah & Y. Perez & V. Rious & M. Saguan, 2013. "Implementing Incentive Regulation and Regulatory Alignment with Resource Bounded Regulators," Competition and Regulation in Network Industries, Intersentia, vol. 14(3), pages 265-291, September.
  6. Haney, Aoife Brophy & Pollitt, Michael G., 2013. "International benchmarking of electricity transmission by regulators: A contrast between theory and practice?," Energy Policy, Elsevier, vol. 62(C), pages 267-281.
  7. Shinji Yane & Sanford Berg, 2013. "Sensitivity analysis of efficiency rankings to distributional assumptions: applications to Japanese water utilities," Applied Economics, Taylor & Francis Journals, vol. 45(17), pages 2337-2348, June.
  8. Llorca, Manuel & Orea, Luis & Pollitt, Michael, 2013. "Efficiency and Environmental Factors in the US Electricity Transmission Industry," Cambridge Working Papers in Economics 1318, Faculty of Economics, University of Cambridge.
  9. Mark Andor & Frederik Hesse, . "A Monte Carlo Simulation comparing DEA, SFA and two simple approaches to combine efficiency estimates," Working Papers 201177, Institute of Spatial and Housing Economics, Munster Universitary.
  10. Andor, Mark & Hesse, Frederik, 2011. "A Monte Carlo simulation comparing DEA, SFA and two simple approaches to combine efficiency estimates," CAWM Discussion Papers 51, Center of Applied Economic Research Münster (CAWM), University of Münster.
  11. Anne Neumann & Maria Nieswand & Torben Schubert, 2013. "Estimating Alternative Technology Sets in Nonparametric Efficiency Analysis: Restriction Tests for Panel and Clustered Data," Discussion Papers of DIW Berlin 1283, DIW Berlin, German Institute for Economic Research.
  12. Mountain, Bruce & Littlechild, Stephen, 2010. "Comparing electricity distribution network revenues and costs in New South Wales, Great Britain and Victoria," Energy Policy, Elsevier, vol. 38(10), pages 5770-5782, October.
  13. Haney, Aoife Brophy & Pollitt, Michael G., 2011. "Exploring the determinants of “best practice” benchmarking in electricity network regulation," Energy Policy, Elsevier, vol. 39(12), pages 7739-7746.
  14. I. Horta & A. Camanho & Jill Johnes & Geraint Johnes, 2013. "Performance trends in the construction industry worldwide: an overview of the turn of the century," Journal of Productivity Analysis, Springer, vol. 39(1), pages 89-99, February.
  15. Antonio Estache, 2010. "Infrastructure Policy for Shared Growth Post-2008: More and Better, or Simply More Complex ?," Working Papers ECARES ECARES 2010-032, ULB -- Universite Libre de Bruxelles.
  16. Machek Ondrej, 2011. "Regulatory Benchmarking In Central Europe: Current Practice And Possibilities Of Development For The Energy Sector," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 80-86, July.
  17. Jean-Michel Glachant & Haikel Khalfallah & Yannick Perez & Vincent Rious & Marcelo Saguan, 2013. "Implementing incentive regulation through an alignment with resource bounded regulators," Post-Print halshs-00767872, HAL.
  18. Andor, Mark & Hesse, Frederik, 2012. "The StoNED age: The departure into a new era of efficiency analysis? An MC study comparing StoNED and the "oldies" (SFA and DEA)," CAWM Discussion Papers 60, Center of Applied Economic Research Münster (CAWM), University of Münster.
  19. Eduardo Martínez Chombo, 2009. "Sources of Over-Costs and Distortions in State-Owned Utilities in Mexico," Working Papers 2009-07, Banco de México.
  20. Mark Andor & Frederik Hesse, 2014. "The StoNED age: the departure into a new era of efficiency analysis? A monte carlo comparison of StoNED and the “oldies” (SFA and DEA)," Journal of Productivity Analysis, Springer, vol. 41(1), pages 85-109, February.

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