Abstract
Quality of service has emerged as an important issue in post-reform regulation of electricity distribution networks. Regulators have employed partial incentive schemes to promote cost saving, investment efficiency, and service quality. This paper presents a quality-incorporated benchmarking study of the electricity distribution utilities in the UK between 1991/92 and 1998/99. We calculate technical efficiency of the utilities using Data Envelopment Analysis technique and productivity change over time using quality-incorporated Malmquist indices. We find that cost-efficient firms do not necessarily exhibit high service quality and that efficiency scores of cost-only models do not show high correlation with those of quality-based models. The results also show that improvements in service quality have made a significant contribution to the sector's total productivity change. In addition, we show that integrating quality of service in regulatory benchmarking is preferable to cost-only approaches.
Original language | English (US) |
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Pages (from-to) | 2256-2271 |
Number of pages | 16 |
Journal | Energy Policy |
Volume | 33 |
Issue number | 17 |
DOIs | |
State | Published - Nov 2005 |
Keywords
- Benchmarking
- Incentive regulation
- Quality of service
ASJC Scopus subject areas
- General Energy
- Management, Monitoring, Policy and Law