Abstract
In those countries where the electric production chain has been disintegrated, transportation utilities (transmission as well as distribution) are subject to regulation or are under supervised activity. Regulation of activities considered as natural monopolies in network economies requires knowing or assessing efficient capital and operating expenditures (CAPEX and OPEX) depending on the output levels. The problem of determining the tariffs that transmission utilities can charge is tightly related to efficient OPEX levels. This work discusses the use of Data Envelopment Analysis and Stochastic Frontier Analysis to determine efficient frontiers for the electricity transmission activity. The results include relative efficiency and productivity indexes, as well as benchmarking peers. This information can be useful to the regulator to foster efficient performance of transmission utilities.
Highlights
As many other countries, Colombia carried out institutional and economic reforms in the nineties, which focused the State action on long term planning, regulation and specialized supervision, as well as on social services provision
The economically relevant output is the arithmetic product of the two output variables [17]. This function exhibits constant returns to scale in voltage and decreasing returns in amount of conductor and power losses
We present the results for Data Envelopment Analysis (DEA) models type 1 and 2
Summary
Colombia carried out institutional and economic reforms in the nineties, which focused the State action on long term planning, regulation and specialized supervision, as well as on social services provision. In the case of the electricity sector, as in other public utilities, the industry was unbundled, allowing free entry of private investors. Incentive regulation has been adopted to foster efficiency improvements in transmission and distribution activities. The Energy and Gas Regulatory Commission (CREG) is in charge of setting the rules to achieve optimal performance levels. In addition it must design the market operating rules to guarantee free entrance of agents and to avoid the use of market powers
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