This paper is an empirical assessment of the comparative efficiency of governance structures in an environment marked by high uncertainty. We analyze the short-term impact of retail deregulation on the productive efficiency of electric utilities in the United States. We argue that there are transitory costs linked to the process of deregulation. The business strategy literature suggests different governance structures to cope with uncertainty linked to changing regulatory environments. Transaction cost economics suggests that firms may reduce their exposure to the uncertainty created by the process of deregulation by adopting vertical integration strategies. Organizational scholars on the contrary argue that firms vertically disintegrate and adopt flexible governance structures to increase their adaptability to the new conditions. Our empirical analysis is based on 177 investor-owned electric utilities representing 83% of the total U.S. electricity production by utilities from 1998-2001. Our results show that the process of deregulation has a negative impact on firms' productive efficiency measured using Data Envelopment Analysis. However, firms that are vertically integrated into electricity generation or that rely on the market for the supply of their electricity are more efficient than firms that adopt hybrid structures combining vertical integration and contracting.

Deregulation Process, Governance Structures and Efficiency: The U.S. Electric Utility Sector

This paper investigates the performance of various generation plants in the Korean electricity market. The objective is to compare performance before and after the 2001 separation by using data from 1995 to 2006. The efficiency and productivity of the generation units is estimated by using a stochastic frontier model as well as data envelopment analysis and Malmquist productivity index. The result suggests that generation is mainly affected by facility type, maintenance cost, real fuel cost, and other costs. The national generation plan is characterized by high efficiency of nuclear plants, base type facilities, and large size facilities. It is also found that efficiency enhancement from the separation effect is not clearly discernible when comparing periods before and after the separation. Suggestions are made for the better utilization of economies of scale to further raise the efficiency of generation companies and the electricity industry through enhancement of fuel purchasing power and reallocation of labour.

Efficiency and productivity impacts of restructuring the Korean electricity generation

This study specifies and estimates a model to investigate the relationship between different phases of the electricity industry and market. These include the generation, transmission, distribution and demand segments. Common variables that explain these segments are identified and their effects estimated. Korean time series data from the period 1961 to 2008 are considered for the empirical analysis. In the study, a series of steps is conducted. First, using cointegration and causality tests, the relationships between the variables of interest are established. Second, each phase is specified as a function of its determinants. Third, the phases are then estimated as an interdependent recursive system. By using the predicted values of variables from the previous phases, a possible endogeneity problem is avoided. Fourth, a model for the forecast is specified and estimated, and the future demand predicted. Finally, based on the results, policy guidelines are suggested to improve the market structure of the industry, and measures are proposed to achieve the stated goals of the industry and market.

Time series analysis of interdependent phases of the electricity industry in South Korea

Praca využiva DEA modely (hodnotenie samostatne sa rozhodujucich utvarov v ramci skupiny) na priklade hodnotenia fakult slovenských vysokých skol.

DEA analýza efektívnosti: SBM model

Prior to the 1990s, the electric power industry was highly regulated in worldwide bases. Under a new policy of open markets and introducing competition into the industry, efficient management has become a requirement for these companies. The purpose of this study is to examine the divisional efficiency of multi-functioned vertically integrated companies in order to optimize overall management efficiency. For this purpose, cost data of each division is applied as input to the Slacks-Based Measure (SBM) model, which provides an efficiency index for each input factor based on slacks as well as to provide an efficiency index for overall management. Furthermore, considering the important role of cost share structure, this study introduces a slightly modified SBM, namely, the Weighted SBM (WSBM), which directly incorporates weight among inputs into the objective function. The results reveal that the generation division has a significant influence on overall cost, while the impact of the other four divisions is limited and reflects their cost shares.

http://www3.grips.ac.jp/~pinc/pdf/I-2006-0006.pdf

Miki Tsutsui

Papers

Multi-division efficiency evaluation of the US electric power companies: An application of the Weighted Slacks-Based Measure