Benchmarking and incentive regulation of quality of service: An application to the UK electricity distribution networks

Dimitrios Giannakis, Tooraj Jamasb, Michael Pollitt

Research output: Contribution to journalArticlepeer-review

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 languageEnglish (US)
Pages (from-to)2256-2271
Number of pages16
JournalEnergy Policy
Volume33
Issue number17
DOIs
StatePublished - Nov 2005

Keywords

  • Benchmarking
  • Incentive regulation
  • Quality of service

ASJC Scopus subject areas

  • Energy(all)
  • Management, Monitoring, Policy and Law

Fingerprint Dive into the research topics of 'Benchmarking and incentive regulation of quality of service: An application to the UK electricity distribution networks'. Together they form a unique fingerprint.

Cite this