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Static versus dynamic DEA in electricity regulation: the case of US transmission system operators

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  • Philipp Geymueller

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Abstract

In this paper a dynamic DEA-model (data envelopment analysis) is developed that takes up Nemoto and Goto’s (Econ Lett 64(1):51–56, 1999) concept of quasi-fixed inputs but can dispense with price-information as it solely deals with technical efficiencies that are derived in an additive-model type of setting. This model is applied to the data of 50 of the largest US electric transmission system operators in the period 2000–2006 in order to show that the static DEA-models that are usually employed by electricity regulators can lead to wrong conclusions about the enterprises’ efficiency since they ignore the short-run fixity of essential inputs like transmission lines. Copyright Springer-Verlag 2009

Suggested Citation

  • Philipp Geymueller, 2009. "Static versus dynamic DEA in electricity regulation: the case of US transmission system operators," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 17(4), pages 397-413, December.
  • Handle: RePEc:spr:cejnor:v:17:y:2009:i:4:p:397-413
    DOI: 10.1007/s10100-009-0099-x
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    References listed on IDEAS

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    1. Sueyoshi, Toshiyuki & Sekitani, Kazuyuki, 2005. "Returns to scale in dynamic DEA," European Journal of Operational Research, Elsevier, vol. 161(2), pages 536-544, March.
    2. Giannakis, Dimitrios & Jamasb, Tooraj & Pollitt, Michael, 2005. "Benchmarking and incentive regulation of quality of service: an application to the UK electricity distribution networks," Energy Policy, Elsevier, vol. 33(17), pages 2256-2271, November.
    3. Fare, Rolf & Grosskopf, Shawna & Tyteca, Daniel, 1996. "An activity analysis model of the environmental performance of firms--application to fossil-fuel-fired electric utilities," Ecological Economics, Elsevier, vol. 18(2), pages 161-175, August.
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    5. Jamasb, T. & Pollitt, M., 2000. "Benchmarking and regulation: international electricity experience," Utilities Policy, Elsevier, vol. 9(3), pages 107-130, September.
    6. 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.
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    Citations

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    Cited by:

    1. Kao, Chiang, 2013. "Dynamic data envelopment analysis: A relational analysis," European Journal of Operational Research, Elsevier, vol. 227(2), pages 325-330.
    2. Sueyoshi, Toshiyuki & Yuan, Yan & Goto, Mika, 2017. "A literature study for DEA applied to energy and environment," Energy Economics, Elsevier, vol. 62(C), pages 104-124.
    3. Kao, Chiang, 2014. "Network data envelopment analysis: A review," European Journal of Operational Research, Elsevier, vol. 239(1), pages 1-16.
    4. Pointon, Charlotte & Matthews, Kent, 2016. "Dynamic efficiency in the English and Welsh water and sewerage industry," Omega, Elsevier, vol. 58(C), pages 86-96.
    5. repec:wly:agribz:v:33:y:2017:i:4:p:505-521 is not listed on IDEAS
    6. repec:spr:jecstr:v:6:y:2017:i:1:d:10.1186_s40008-017-0073-z is not listed on IDEAS
    7. Llorca, Manuel & Orea, Luis & Pollitt, Michael G., 2016. "Efficiency and environmental factors in the US electricity transmission industry," Energy Economics, Elsevier, vol. 55(C), pages 234-246.
    8. Llorca, Manuel & Orea, Luis & Pollitt, Michael G., 2014. "Using the latent class approach to cluster firms in benchmarking: An application to the US electricity transmission industry," Operations Research Perspectives, Elsevier, vol. 1(1), pages 6-17.
    9. Pointon, Charlotte & Matthews, Kent, 2016. "Reprint of: Dynamic efficiency in the English and Welsh water and sewerage industry," Omega, Elsevier, vol. 60(C), pages 98-108.
    10. Llorca, Manuel & Orea, Luis & Pollit, Michael G., 2013. "Using in the latent class approach as a supervised method to cluster firms in DEA: An application to the US electricity transmission industry," Efficiency Series Papers 2013/03, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    11. Haney, Aoife Brophy & Pollitt, Michael G., 2013. "International benchmarking of electricity transmission by regulators: A contrast between theory and practice?," Energy Policy, Elsevier, vol. 62(C), pages 267-281.
    12. Magdalena Kapelko, 2017. "Dynamic versus static inefficiency assessment of the Polish meat‐processing industry in the aftermath of the European Union integration and financial crisis," Agribusiness, John Wiley & Sons, Ltd., vol. 33(4), pages 505-521, September.

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