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Managing power supply interruptions: a bottom-up spatial (frontier) model with an application to a Spanish electricity network

Author

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  • Pablo Argüelles

    (EDP España and University of Oviedo)

  • Luis Orea

    (University of Oviedo and Oviedo Efficiency Group)

Abstract

In December 2013, a new electricity law was approved in Spain as part of an electricity market reform including a new remuneration scheme for distribution companies. This remuneration scheme was updated in December 2019, and the new regulatory framework introduced a series of relevant modifications that aim to encourage regulated firms to reduce their power supply interruptions using a benchmarking approach. While some managerial decisions can prevent electricity power supply interruptions, other managerial decisions are more oriented toward mitigating the consequences of these interruptions. This paper examines the second type of decision using a unique dataset referring to the power supply interruptions of a Spanish distribution company network between 2013 and 2019. We focus our analysis on the effect which grid automatization has on restoration times, the relative efficiency of the maintenance staff, and the importance of its location. We estimate a bottom-up spatial model and a stochastic frontier model to examine both external and internal power supply interruptions at municipal level. While our frontier model is standard, our spatial model differs from a conventional one in that it is developed from scratch using the information of each individual power supply interruption.

Suggested Citation

  • Pablo Argüelles & Luis Orea, 2021. "Managing power supply interruptions: a bottom-up spatial (frontier) model with an application to a Spanish electricity network," Empirical Economics, Springer, vol. 60(6), pages 2867-2896, June.
    • Handle: RePEc:spr:empeco:v:60:y:2021:i:6:d:10.1007_s00181-020-01968-3
    DOI: 10.1007/s00181-020-01968-3
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    1. Subal C. Kumbhakarⓡ & Emir Malikovⓡ & Christopher F. Parmeterⓡ, 2021. "Applications of efficiency and productivity analysis: editors’ introduction," Empirical Economics, Springer, vol. 60(6), pages 2657-2663, June.

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    More about this item

    Keywords

    Electricity distribution; Power supply interruptions; Spatial econometrics; Frontier models;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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