Performance Effects of Network Structure and Ownership: The Norwegian Electricity Distribution Sector
Manuel Llorca () and
Additional contact information
Wenche Tobiasson: RISE Research Institutes of Sweden, Sven Hultins Plats 5, 412 58 Göteborg, Sweden
Energies, 2021, vol. 14, issue 21, 1-0
Transmission and distribution networks are capital intensive segments of the electricity sector and are generally considered natural monopolies. Due to their non-competitive nature, these are subject to independent regulation to prevent the abuse of monopolistic power and to induce competitive behaviour. Effective economic regulation of the electricity networks has become a key target in most developed economies after the 1980s. In Norway, incentive regulation and efficiency benchmarking were introduced in 1997. In Norway, the electricity grid is divided into three levels, namely, central, regional and distribution networks. In this paper, we study two overlooked aspects when analysing the performance of electricity networks: vertical integration and ownership structure. We use a stochastic frontier analysis approach to analyse the performance of Norwegian electricity distribution utilities for the period 2007–2014. We observe that vertical integration between distribution and regional transmission implies higher cost inefficiencies. This indicates that the efficiency gains due to separate management of the networks exceed the economies of coordination from vertical economies of scope. In addition, we find that council ownership entails higher efficiencies. This could be explained by the state having an interest in high-voltage electricity networks, rather than low-voltage ones, and the decentralised model from which the now centralised system was once developed.
Keywords: Norwegian electricity distribution; regional transmission; heteroscedastic stochastic cost frontiers; vertical integration; ownership structure (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:14:y:2021:i:21:p:7160-:d:669941
Access Statistics for this article
Energies is currently edited by Mr. Addison Su
More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().