A multi-division efficiency evaluation of U.S. electric power companies using a weighted slacks-based measure
Prior to the 1990s, the electric power industry was highly regulated across the world. Under a liberalization policy to open markets and to grow competition commenced in the early 1990s, efficient management has become a necessity for companies in this industry. The current study examines the divisional efficiencies of multi-functional, vertically integrated companies seeking to optimize their overall management efficiency. For this purpose, divisional cost data are used as input into a slacks-based measure (SBM) model. This provides divisional efficiency indices based on slacks, as well as one for the larger firm-level management function. Further, given the important role of cost structure, we introduce a modified SBM, named the weighted SBM (WSBM), which directly incorporates division-specific weights into the objective function. Results reveal that the power generation divisions of the companies studied have significant influence on the overall cost, whereas the impact of the other four divisions - transmission, distribution, sales and general administrative - is limited.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Goto, Mika & Tsutsui, Miki, 1998. "Comparison of Productive and Cost Efficiencies Among Japanese and US Electric Utilities," Omega, Elsevier, vol. 26(2), pages 177-194, April.
- Morita, Hiroshi & Hirokawa, Koichiro & Zhu, Joe, 2005. "A slack-based measure of efficiency in context-dependent data envelopment analysis," Omega, Elsevier, vol. 33(4), pages 357-362, August.
- Thomas Sexton & Herbert Lewis, 2003. "Two-Stage DEA: An Application to Major League Baseball," Journal of Productivity Analysis, Springer, vol. 19(2), pages 227-249, April.
- H. Fried & C. Lovell & S. Schmidt & S. Yaisawarng, 2002. "Accounting for Environmental Effects and Statistical Noise in Data Envelopment Analysis," Journal of Productivity Analysis, Springer, vol. 17(1), pages 157-174, January.
- Ruggiero, John & Bretschneider, Stuart, 1998. "The weighted Russell measure of technical efficiency," European Journal of Operational Research, Elsevier, vol. 108(2), pages 438-451, July.
- Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
- Hjalmarsson, Lennart & Veiderpass, Ann, 1992. " Productivity in Swedish Electricity Retail Distribution," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages 193-205, Supplemen.
- Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
- Pastor, J. T. & Ruiz, J. L. & Sirvent, I., 1999. "An enhanced DEA Russell graph efficiency measure," European Journal of Operational Research, Elsevier, vol. 115(3), pages 596-607, June.
- Drake, Leigh & Hall, Maximilian J.B. & Simper, Richard, 2006.
"The impact of macroeconomic and regulatory factors on bank efficiency: A non-parametric analysis of Hong Kong's banking system,"
Journal of Banking & Finance,
Elsevier, vol. 30(5), pages 1443-1466, May.
- Leigh M. Drake & Maximilian J. B. Hall & Richard Simper, 2005. "The Impact of Macroeconomic and Regulatory Factors on Bank Efficiency: A Non-Parametric Analysis of Hong Kong's Banking System," Working Papers 012005, Hong Kong Institute for Monetary Research.
- אסתר טולידנו, 2000. "מקבלי דמי אבטלה בשנת 1999," Working Papers 505, National Insurance Institute of Israel.
- Delmas, Magali & Tokat, Yesim, 2003. "Deregulation Process, Governance Structures and Efficiency: The U.S. Electric Utility Sector," Research Papers 1790, Stanford University, Graduate School of Business.
- George E. Battese & Greg S. Corra, 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 21(3), pages 169-179, December.
- דר מירי לוין רוזליס & רפי יודלביץ, 2000. "קבוצות לילדי נגמלים מסמים," Working Papers 156, National Insurance Institute of Israel.
- 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.
- Hemphill Ross C. & Meitzen Mark E. & Schoech Philip E., 2003. "Incentive Regulation in Network Industries: Experience and Prospects in the U.S. Telecommunications, Electricity, and Natural Gas Industries," Review of Network Economics, De Gruyter, vol. 2(4), pages 1-22, December.
- רמסיס גרא וברנדה מורגנשטיין, 2000. "מקבלי גמלת סיעוד 1999," Working Papers 520, National Insurance Institute of Israel.
- Battese, George E. & Corra, Greg S., 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(03), December.
- Jamasb, T. & Pollitt, M., 2000. "Benchmarking and regulation: international electricity experience," Utilities Policy, Elsevier, vol. 9(3), pages 107-130, September.
- Tone, Kaoru, 2001. "A slacks-based measure of efficiency in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 130(3), pages 498-509, May.
- Førsund, Finn R. & Kittelsen, Sverre A. C., 1998. "Productivity development of Norwegian electricity distribution utilities," Resource and Energy Economics, Elsevier, vol. 20(3), pages 207-224, September.
- Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eee:soceps:v:43:y:2009:i:3:p:201-208. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.