IDEAS home Printed from https://ideas.repec.org/h/spr/isochp/978-1-4899-7684-0_4.html

Social Cost Efficient Service Quality: Integrating Customer Valuation in Incentive Regulation—Evidence from the Case of Norway

In: Data Envelopment Analysis

Author

Listed:
  • Christian Growitsch

    (University of Hamburg)

  • Tooraj Jamasb

    (Durham University Business School)

  • Christine Müller

    (WIK)

  • Matthias Wissner

    (WIK)

Abstract

In order to overcome the perverse incentives of excessive maintenance reductions and insufficient network investments arising with incentive regulation of electricity distribution companies, regulators throughout Europe have started regulating service quality. In this paper, we explore the impact of incorporating customers’ willingness-to-pay for service quality in benchmarking models on cost efficiency of distribution networks. Therefore, we examine the case of Norway, which features this approach to service quality regulation. We use the data envelopment analysis technique to analyse the effectiveness of such regulatory instruments. Moreover, we discuss the extent to which this indirect regulatory instrument motivates a socially desired service quality level. The results indicate that internalising external or social cost of service quality does not seem to have played an important role in improving cost efficiency in Norwegian distribution utilities.

Suggested Citation

  • Christian Growitsch & Tooraj Jamasb & Christine Müller & Matthias Wissner, 2016. "Social Cost Efficient Service Quality: Integrating Customer Valuation in Incentive Regulation—Evidence from the Case of Norway," International Series in Operations Research & Management Science, in: Joe Zhu (ed.), Data Envelopment Analysis, chapter 0, pages 71-91, Springer.
    • Handle: RePEc:spr:isochp:978-1-4899-7684-0_4
    DOI: 10.1007/978-1-4899-7684-0_4
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yuan, Peng & Pu, Yuran & Liu, Chang, 2021. "Improving electricity supply reliability in China: Cost and incentive regulation," Energy, Elsevier, vol. 237(C).
    2. Xie, Bai-Chen & Zhang, Zhen-Jiang & Anaya, Karim L., 2021. "Has the unbundling reform improved the service efficiency of China's power grid firms?," Energy Economics, Elsevier, vol. 95(C).
    3. Ghasemi, Mostafa & Dashti, Reza, 2017. "A risk-based model for performance-based regulation of electric distribution companies," Utilities Policy, Elsevier, vol. 45(C), pages 36-44.
    4. Landegren, Finn & Johansson, Jonas & Samuelsson, Olof, 2019. "Quality of supply regulations versus societal priorities regarding electricity outage consequences: Case study in a Swedish context," International Journal of Critical Infrastructure Protection, Elsevier, vol. 26(C).
    5. Maziotis, Alexandros & Villegas, Andrés & Molinos-Senante, María & Sala-Garrido, Ramon, 2020. "Impact of external costs of unplanned supply interruptions on water company efficiency: Evidence from Chile," Utilities Policy, Elsevier, vol. 66(C).
    6. Saastamoinen, Antti & Kuosmanen, Timo, 2016. "Quality frontier of electricity distribution: Supply security, best practices, and underground cabling in Finland," Energy Economics, Elsevier, vol. 53(C), pages 281-292.
    7. Nepal, Rabindra & Jamasb, Tooraj, 2015. "Incentive regulation and utility benchmarking for electricity network security," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 117-127.
    8. Yauheniya Varabyova & Jonas Schreyögg, 2018. "Integrating quality into the nonparametric analysis of efficiency: a simulation comparison of popular methods," Annals of Operations Research, Springer, vol. 261(1), pages 365-392, February.
    9. Corton, Maria Luisa & Zimmermann, Aneliese & Phillips, Michelle Andrea, 2016. "The low cost of quality improvements in the electricity distribution sector of Brazil," Energy Policy, Elsevier, vol. 97(C), pages 485-493.
    10. Cambini, Carlo & Croce, Annalisa & Fumagalli, Elena, 2014. "Output-based incentive regulation in electricity distribution: Evidence from Italy," Energy Economics, Elsevier, vol. 45(C), pages 205-216.
    11. Linares, Pedro & Rey, Luis, 2013. "The costs of electricity interruptions in Spain. Are we sending the right signals?," Energy Policy, Elsevier, vol. 61(C), pages 751-760.
    12. Du, Juan & Xu, Yanhong & Wang, Yi, 2023. "How to improve sustainability for industrial sectors: Optimizing production scales based on performance-oriented resource reallocation," Energy Economics, Elsevier, vol. 119(C).
    13. 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).
    14. Castro, Rui & Faias, Sérgio & Esteves, Jorge, 2016. "The cost of electricity interruptions in Portugal: Valuing lost load by applying the production-function approach," Utilities Policy, Elsevier, vol. 40(C), pages 48-57.
    15. Müller, Christine & Growitsch, Christian & Wissner, Matthias, 2010. "Regulierung und Investitionsanreize in der ökonomischen Theorie. IRIN Working Paper im Rahmen des Arbeitspakets: Smart Grid-gerechte Weiterentwicklung der Anreizregulierung," WIK Discussion Papers 349, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.
    16. Müller, Christine, 2011. "New regulatory approaches towards investments: A revision of international experiences ; IRIN working paper for working package: Advancing incentive regulation with respect to smart grids," WIK Discussion Papers 353, WIK Wissenschaftliches Institut für Infrastruktur und Kommunikationsdienste GmbH.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:isochp:978-1-4899-7684-0_4. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.