Impact of High-Powered Incentive Regulations on Efficiency and Productivity Growth of Norwegian Electricity Utilities

Senyonga, Livingstone; Bergland, Olvar

doi:10.5547/01956574.39.5.lsen

Cited by 15 publications

(9 citation statements)

References 60 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Figure 2 shows the distribution of efficiency scores for the firms using the translog specification with inefficiency determinants. The average efficiency in the sample is 93.6%, in line with previous studies of Norwegian electricity networks (see, instance, [26]). Figure 3 shows the average efficiency score for each year.…”

Section: Resultssupporting

confidence: 89%

“…Norway has over 150 distribution network owners, responsible for the lower voltage section of the grid. In 1997, NVE introduced an incentive-based regulatory framework to encourage utilities to reduce costs and improve efficiency which has succeeded to improve performance of the network sector [26]. The allowed revenue is set using total cost benchmarking according to the formula in (1):…”

Section: The Norwegian Settingmentioning

confidence: 99%

See 1 more Smart Citation

Performance Effects of Network Structure and Ownership: The Norwegian Electricity Distribution Sector

2021

View full text Add to dashboard Cite

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.

show abstract

Section: Resultssupporting

confidence: 89%

Section: The Norwegian Settingmentioning

confidence: 99%

Performance Effects of Network Structure and Ownership: The Norwegian Electricity Distribution Sector

2021

View full text Add to dashboard Cite

show abstract

“…Using a stochastic frontier analysis, Senyonga and Bergland (2018) find that yardstick regulation enhanced technical change and productivity growth of Norwegian electric utilities in 2007-12 relative to price cap regulation in 2004-6.…”

Section: Public Economicsmentioning

confidence: 99%

The Economics and Regulation of Network Industries

Vogelsang

2021

View full text Add to dashboard Cite

Have you ever wondered how your telephone company or Internet service provider can give you access to almost all people in the world, or how electricity suppliers can compete with each other if there is only one electric supply line passing through your street? This Element deals with the economics and public regulation of such network industries. It puts particular emphasis on the specific economic concepts used for analyzing them and on the regulatory reform movement and the compatibility of regulation and competition. Worldwide most of these industries have changed dramatically in recent years, telecommunications in particular. Network industries mostly exhibit economies of scale in production and similar economies in consumption. Both of these properties cause market power problems that often require industry-specific regulation. However, due to technological and market changes network policies have moved on from end-user regulation to wholesale regulation and in some cases to deregulation.

show abstract

“…Regulatory frameworks could stimulate innovation and therefore improve efficiency in the energy sector (European Commission, 2019;CEER, 2020aCEER, , 2020bACER, 2021). Evidence suggests that liberalizing policies can improve performance in the energy sector though various pathways: competition policy enforcement can exert a positive impact on productivity in the energy market (Duso et al, 2019); institutional reform and privatization have been associated with improvements in quality and efficiency in the Latin American Electricity Sector (Balza et al, 2013); deregulation provides incentives for agents to make careful investment decisions that are more consistent with the technological nature of (nuclear) power plants (Lei et al, 2017); regulatory independence improves electricity generation performance in India (Jindal and Nilakantan, 2022); privatization in the Swedish electricity distribution sector gave rise to efficiency gains (Lundin, 2020); electricity reform improved technical efficiency in Indian power distribution (Bobde and Tanaka, 2020); vertical separation of transmission network allows a more efficient allocation of resources and therefore cost savings (Chu, 2021); electricity price policies can affect the deployment of new technologies (Sinsel et al, 2020); technical efficiency was also considered an indicator of the effectiveness of regulatory regimes in the Norwegian electricity sector (Senyonga and Bergland, 2018); finally, the transition from a bilateral electricity market to a centralized auction market in Texas was found to help improve market efficiency and reduce cost (Brehm and Zhang, 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

Operational Efficiency Improvements in the Portuguese Electricity Sector

Roseta-Palma

Ramalho

2023

Preprint

View full text Add to dashboard Cite

Efficiency has long been an issue of concern in the electricity sector. Most existing studies relate technical efficiency in electricity generation to policy factors while that in transmission and distribution is associated with environmental factors. Although firm operation is also a relevant perspective on this topic, its explicit impact upon technical efficiency has rarely been studied. In order to analyze the evolution and operational determinants of productive and cost efficiency in the Portuguese electricity sector (including generation from different sources, trade, transmission and distribution), this study estimates Stochastic Frontier models using firm-level panel data from 2006 to 2019, covering the period of liberalization of the Portuguese electricity market. The evidence is consistent with the expectation on efficiency gains from the market reform. However, such improvement is likely to slow down and needs to be consolidated. Results on the inefficiency determinants suggest that it is possible to improve productive technical efficiency by encouraging investment in fixed assets, higher average hourly wage and moderate average working hours. JEL classification: D24, L23, O25, Q40

show abstract

Impact of High-Powered Incentive Regulations on Efficiency and Productivity Growth of Norwegian Electricity Utilities

Cited by 15 publications

References 60 publications

Performance Effects of Network Structure and Ownership: The Norwegian Electricity Distribution Sector

Performance Effects of Network Structure and Ownership: The Norwegian Electricity Distribution Sector

The Economics and Regulation of Network Industries

Operational Efficiency Improvements in the Portuguese Electricity Sector

Contact Info

Product

Resources

About