Productivity Analysis of German Electricity Distribution Utilities
This paper provides a productivity analysis of German electricity distribution companies. It addresses both traditional issues in electricity sector benchmarking, such as the role of scale effects and optimal utility size, as well as new evidence specific to the situation in Germany. Regarding the latter, we consider the potential effects of the three structural variables defined in the association agreements ("Verbändevereinbarung Strom VV II+"): consumer density, grid composition (cable versus aerial lines),and differences between East and West German distribution companies. We use labour, capital, and peak load capacity as inputs, and units sold and the number of customers as output. The data covers 380 (out of 553) German electricity distribution utilities. We apply a non-parametric data envelopment analysis (DEA) with constant returns to scale (CRS) as the main productivity analysis technique, whereas stochastic frontier analysis (SFA) is our verification method. The results suggest that returns to scale play a minor role: only very small utilities have a significant cost advantage. Low customer density is found to affect the efficiency score significantly in the lower third of all observations. The grid composition does not produce systematic effects. Surprisingly, East German utilities feature a higher average efficiency than their West German counterparts. The correlation tests imply a high coherence of the results.
|Date of creation:||2004|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.diw.de/en
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Antonio Estache & Martin Rossi & Christian Ruzzier, 2004.
"The Case for International Coordination of Electricity Regulation: Evidence from the Measurement of Efficiency in South America,"
ULB Institutional Repository
2013/43975, ULB -- Universite Libre de Bruxelles.
- Antonio Estache & MartÌn A. Rossi & Christian A. Ruzzier, 2004. "The Case for International Coordination of Electricity Regulation: Evidence from the Measurement of Efficiency in South America," Journal of Regulatory Economics, Springer, vol. 25(3), pages 271-295, 05.
- Estache, Antonio & Rossi, Martin A. & Ruzzier, Christian A., 2002. "The case for international coordination of electricity regulation : evidence from the measurement of efficiency in South America," Policy Research Working Paper Series 2907, The World Bank.
- Massimo Filippini & Jörg Wild, 2000.
"Regional Differences in Electricity Distribution Costs and their Consequences for Yardstick Regulation of Access Prices,"
CEPE Working paper series
00-05, CEPE Center for Energy Policy and Economics, ETH Zurich.
- Filippini, Massimo & Wild, Jorg, 2001. "Regional differences in electricity distribution costs and their consequences for yardstick regulation of access prices," Energy Economics, Elsevier, vol. 23(4), pages 477-488, July.
- Burns, Philip & Weyman-Jones, Thomas G, 1996. "Cost Functions and Cost Efficiency in Electricity Distribution: A Stochastic Frontier Approach," Bulletin of Economic Research, Wiley Blackwell, vol. 48(1), pages 41-64, January.
When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp418. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek)
If references are entirely missing, you can add them using this form.