Modelling Efficiency of Electric Utilities Using Three Stage Virtual Frontier Data Envelopment Analysis with Variable Selection by Loads Method

Electric utility regulators and policy makers implement incentive-based regulation to improve electric utilities efficiency or to manage the cost of electricity. However, poorly implemented regulation may produce undesired results such as low reliability or poor quality of service. Moreover, the com...

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Vydané v:Energies (Basel) Ročník 14; číslo 12; s. 3436
Hlavní autori: Kannan, Pavala Malar, Marthandan, Govindan, Kannan, Rathimala
Médium: Journal Article
Jazyk:English
Vydavateľské údaje: Basel MDPI AG 01.06.2021
Predmet:
Capital costs
Data envelopment analysis
data envelopment analysis (DEA)
Economic value added
Edison, Thomas Alva (1847-1931)
Efficiency
Electric industries
Electric utilities
Electricity generation
Legislation
Linear programming
Methods
Quality of service
Regulation
three stage DEA
three stage virtual frontier DEA
variable reduction
virtual frontier DEA
United Kingdom > UK
United States > US
Norway
Illinois
ISSN:1996-1073, 1996-1073
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Shrnutí:Electric utility regulators and policy makers implement incentive-based regulation to improve electric utilities efficiency or to manage the cost of electricity. However, poorly implemented regulation may produce undesired results such as low reliability or poor quality of service. Moreover, the competition within the electricity sector is likely to be low because of the high barriers to entry, vertically integrated electric utilities, and high capital requirements. Therefore, benchmarking exercises allow policy makers and regulators to gauge the relative efficiency of electric utilities and help them to reward or penalize the electric utilities accordingly. In this study, we examined the variables that significantly influence the efficiency of electric utilities and developed an optimum method to measure the efficiency of the electric utilities. The results of the efficiency measurement were then used to rank the electric utilities. The result of this study indicates that there are 13 variables that significantly affect the efficiency score of electric utilities and three stage virtual frontier data envelopment analysis (3S-VF-DEA) is the optimum method to measure the efficiency of the electric utilities.
Bibliografia:ObjectType-Article-1
SourceType-Scholarly Journals-1
ObjectType-Feature-2
content type line 14
ISSN:1996-1073
1996-1073
DOI:10.3390/en14123436