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International Experiences with Using TFP Benchmarking in Energy Industries Regulation

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  • Ondřej Machek
  • Jiří Hnilica

Abstract

The TFP approach (TFP method) is one of the methods of performance-based regulation whose aim is to increase the efficiency of regulated companies. This article presents an overview of current international experience with the application of TFP benchmarking in the price regulation of energy industries. The TFP approach in regulated tariff setting has been used mainly in Anglo-Saxon countries. The method has been used mainly as an underlying method to price decisions. Further, we may state that TFP analysis is an area in which regulatory agencies often rely on external consulting companies, and that for a successful adopting of TFP methodology, a broader social consensus is needed. Data issues seem to be a general obstacle when implementing this method. The international experiences suggest that even a complex method of price regulation where TFP plays only an underlying role may be successful.

Suggested Citation

  • Ondřej Machek & Jiří Hnilica, 2013. "International Experiences with Using TFP Benchmarking in Energy Industries Regulation," Ekonomika a Management, Prague University of Economics and Business, vol. 2013(3), pages 62-73.
    • Handle: RePEc:prg:jnleam:v:2013:y:2013:i:3:id:206:p:62-73
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    References listed on IDEAS

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    1. 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.
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    3. D. Mark Kennet & Noel Uri, 2001. "Measuring Productivity Change for Regulatory Purposes," Journal of Media Economics, Taylor & Francis Journals, vol. 14(2), pages 87-104.
    4. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "Multilateral Comparisons of Output, Input, and Productivity Using Superlative Index Numbers," Economic Journal, Royal Economic Society, vol. 92(365), pages 73-86, March.
    5. Tim Coelli & Denis Lawrence (ed.), 2006. "Performance Measurement and Regulation of Network Utilities," Books, Edward Elgar Publishing, number 3801, December.
    6. Ondřej Machek & Jiří Hnilica, 2010. "Methods of network industries regulation," Ekonomika a Management, Prague University of Economics and Business, vol. 2010(3).
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    More about this item

    Keywords

    Productivity; Benchmarking; Regulation of public utilities; Produktivita; Benchmarking; Regulace síťových odvětví;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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