1. Impact of High-Powered Incentive Regulations on Efficiency and Productivity Growth of Norwegian Electricity Utilities
- Author
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Senyonga, Livingstone and Bergland, Olvar
- Subjects
Energy efficiency -- Laws, regulations and rules ,Energy industry -- Reorganization and restructuring ,Stochastic analysis -- Usage ,Company organization ,Government regulation ,Company restructuring/company reorganization ,Business ,Economics ,Petroleum, energy and mining industries - Abstract
This study examines the hypothesis that changes to high-powered incentive regulations have a positive efficiency and productivity growth effects in a regulated electricity distribution industry. We estimate an input distance function using the stochastic frontier analysis method to compute technical efficiency scores for 121 Norwegian utilities over the period 2004-2012. We explore sources of productivity growth by parametrically decomposing the Malmquist productivity index into efficiency change, technical change, and scale change. Unlike previous studies, we examine the difference in performance across two regulatory regimes: yardstick competition (2007-2012) and RPI-X incentive regulation (2004-2006). Results show significant efficiency and productivity growth improvements with embodied technical change as the main driver. Keywords: Yardstick competition, Productivity growth, Efficiency, Input distance function, Stochastic frontier analysis, Electricity distribution, True fixed effects model, 1. INTRODUCTION The electricity industry has undergone a restructuring process during the last 25 years. Competition has been introduced among generators and often also among retailers. However, system operation, transmission, [...]
- Published
- 2018
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