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Evaluation of Cost Efficiency in Finnish Electricity Distribution

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  • Pekka Korhonen
  • Mikko Syrjänen

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Abstract

This paper describes the process of developing an approach to evaluating the cost-efficiency of Finnish electricity distribution companies based on Data Envelopment Analysis (DEA). The process consisted of three main stages (1) describing of the problem and exploring the key factors, (2) finding measurable quantities for the most essential factors, and (3) selecting the final model to be used in the regulation. Especially the selection of environmental variables, which allow the comparison of distribution companies operating in different environments, played a key role in the process. The selected model is used as a part of the regulation of distribution pricing. Copyright Kluwer Academic Publishers 2003

Suggested Citation

  • Pekka Korhonen & Mikko Syrjänen, 2003. "Evaluation of Cost Efficiency in Finnish Electricity Distribution," Annals of Operations Research, Springer, vol. 121(1), pages 105-122, July.
  • Handle: RePEc:spr:annopr:v:121:y:2003:i:1:p:105-122:10.1023/a:1023355202795
    DOI: 10.1023/A:1023355202795
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