Benchmarking and incentive regulation of quality of service: an application to the UK electricity distribution utilities

D. Giannakis, Tooraj Jamasb and Michael Pollitt

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

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.

Keywords: quality of service; benchmarking; incentive regulation; data envelopment analysis; electricity (search for similar items in EconPapers)
JEL-codes: L15 L51 L94 (search for similar items in EconPapers)
Pages: 38
Date: 2004-01
New Economics Papers: this item is included in nep-com
Note: CMI35, IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://www.econ.cam.ac.uk/electricity/publications/wp/ep35.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.econ.cam.ac.uk/electricity/publications/wp/ep35.pdf [301 Moved Permanently]--> https://www.econ.cam.ac.uk/electricity/publications/wp/ep35.pdf)

Related works:
Working Paper: Benchmarking and Incentive Regulation of Quality of Service: an Application to the UK Electricity Distribution Utilities (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0408

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().