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 journalArticle

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

Fingerprint

benchmarking
Benchmarking
Electric power distribution
incentive
electricity
Quality of service
Electricity
cost
Costs
Productivity
productivity
technical efficiency
data envelopment analysis
Data envelopment analysis
distribution
regulation
services
service quality

Keywords

  • Benchmarking
  • Incentive regulation
  • Quality of service

ASJC Scopus subject areas

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

Cite this

Benchmarking and incentive regulation of quality of service : An application to the UK electricity distribution networks. / Giannakis, Dimitrios; Jamasb, Tooraj; Pollitt, Michael.

In: Energy Policy, Vol. 33, No. 17, 11.2005, p. 2256-2271.

Research output: Contribution to journalArticle

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