International Benchmarking in Electricity Distribution: A Comparison of French and German Utilities
AbstractIn this paper we present an international cross-country benchmarking analysis for utility regulation of France and Germany, the two largest electricity distribution countries in Europe. We examine the relative performance of 99 French and 77 German distribution companies operating within two different market structures. This paper applies several parametric benchmarking approaches to assess the relative technical efficiency of the utilities, such as deterministic Corrected Ordinary Least Squares (COLS) and Stochastic Frontier Analysis (SFA). Our base model uses the number of employees as a proxy for labor and network length as a proxy for capital as inputs. Units sold and the numbers of customers are considered as outputs. Our model variations and extensions analyze the effect of different characteristics of distribution areas (e.g. population density and the choice of investment in underground cable network). We find that utilities operating in urban areas feature higher efficiency scores and that investment in underground cables increase the technical efficiency of the distribution utilities.
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 830.
Length: 25 p.
Date of creation: 2008
Date of revision:
International benchmarking; electricity distribution; parametric efficiency analysis;
Find related papers by JEL classification:
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-10-28 (All new papers)
- NEP-EEC-2008-10-28 (European Economics)
- NEP-EFF-2008-10-28 (Efficiency & Productivity)
- NEP-ENE-2008-10-28 (Energy Economics)
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