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Analysis of electric distribution utilities efficiency levels by stochastic frontier in Brazilian power sector

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  • Cardoso de Mendonça, Mário Jorge
  • Pereira, Amaro Olimpio
  • Medrano, Luis Alberto
  • Pessanha, José Francisco M.

Abstract

The regulatory power sector model in several countries determines tariff review forms based, among other things, on sharing efficiency gains with consumers. As these reviews have an important impact on consumers and distribution utilities, it is necessary that the adopted methodologies always be improved. To this end, this article assessed a Bayesian inference application in order to estimate a stochastic cost frontier considering temporal efficiency dynamics. Taking this point into consideration is essential, since studies carried out to assess power sector efficiency have neglected the fact that part of efficiency increases originate from scale gain due to market expansion, which occurs over time. The sample assessed herein is composed of panel data from 61 electric power utilities between 2003 and 2016. The results demonstrate that the tariff review is positively affected by distributor efficiency.

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  • Cardoso de Mendonça, Mário Jorge & Pereira, Amaro Olimpio & Medrano, Luis Alberto & Pessanha, José Francisco M., 2021. "Analysis of electric distribution utilities efficiency levels by stochastic frontier in Brazilian power sector," Socio-Economic Planning Sciences, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:soceps:v:76:y:2021:i:c:s0038012120308107
    DOI: 10.1016/j.seps.2020.100973
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    1. de Mendonça, Mário Jorge Cardoso & Pereira, Amaro Olimpio & Bellido, Marlon Max H. & Medrano, Luis Alberto & Pessanha, José Francisco Moreira, 2023. "Service quality performance indicators for electricity distribution in Brazil," Utilities Policy, Elsevier, vol. 80(C).

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