Social Cost Efficient Service Quality: Integrating Customer Valuation in Incentive Regulation—Evidence from the Case of Norway

Growitsch, Christian; Jamasb, Tooraj; Müller, Christine; Wissner, Matthias

doi:10.1007/978-1-4899-7684-0_4

Cited by 5 publications

(12 citation statements)

References 13 publications

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“…They are below average scores obtained by Giannakis et al (2005) and Coelli et al (2007), on data from, respectively, the UK and France (around 82%). However, they are above the scores obtained by Growitsch et al (2010) on Norwegian data (between 56% and 63%, depending on the year). Of course, comparison with previous studies should be taken carefully because of the different choices made in terms of input and output variables: Giannakis et al (2005) and Coelli et al (2007) include an additional output (area size/network length), while Giannakis et al (2005) and Growitsch et al (2010) use total expenditures (TOTEX) as an input.…”

Section: Cost-only Modelcontrasting

confidence: 56%

“…The CostENS model is similar to the one studied by Growitsch et al (2010), which employs the same outputs, but a single input, sum of capital and operational expenses, plus the costs of ENS. While Growitsch et al (2010) find no significant differences in 20 On average, the capital ratio on energy consumption has a relative standard deviation equal to 29.60% while the relative standard deviation of the capital ratio on number of customers is 43.63%.…”

Section: Hypotheses On Benchmarking Results and Determinants Of Ineffmentioning

confidence: 99%

“…Such a change is clearly motivated by a wider adoption of quality regulation in European countries. Growitsch et al (2010) use a panel dataset for 131 Norwegian distribution network operators observed over the period 2001 (the year quality regulation was introduced) to 2004. Comparing the efficiency scores of a cost-only and a cost-and-quality DEA model they find no systematic differences between the two (quality is measured by the value of the ENS).…”

Section: Table 1 About Herementioning

confidence: 99%

“…Under the current regulatory reform, this represents an interesting case to investigate how a regulated firm responds to such a incentive scheme. The debate around this issue is, indeed, quite recent (Coelli et al, 2013;Growitsch et al, 2010;Jamasb et al, 2012).…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Output-based incentive regulation in electricity distribution: Evidence from Italy

2014

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Incentive regulation in electricity distribution is expected to enlarge its scope, from an inputoriented instrument to one that includes additional, output-based incentives. This creates a potential conflict with more traditional concerns for productive efficiency. In the case of Italy, together with input-oriented instruments, output-based incentives have been applied to indicators of quality for over a decade. Using micro-data from the largest Italian distribution company, we conduct an assessment of the effects of this regulatory framework. The aim of this word is threefold. First, we measure performance in terms of cost-efficiency and find that similar cost-reducing efforts were exercised in all distribution units. Second, we measure performance with respect to the overall regulatory framework. Using quality-related rewards and penalties, we find that more cost-efficient areas were also more successful in earning rewards/avoiding penalties: favorable external conditions have similar, positive effects on both cost and quality performance. Using the cost of the energy not supplied, we find no evidence of a conflict between cost efficiency and social cost efficiency. Results indicate, however, that is preferable to use social costs when measuring a single unit's performance. From these results we derive specific policy indications.

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Section: Cost-only Modelcontrasting

confidence: 56%

Section: Hypotheses On Benchmarking Results and Determinants Of Ineffmentioning

confidence: 99%

Section: Table 1 About Herementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Output-based incentive regulation in electricity distribution: Evidence from Italy

2014

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“…Norway is a notable exception in integrating the cost of quality (in the form of the value of energy not delivered) in the efficiency benchmarking exercise. Growitsch et al (2010) explored the impact of incorporating customers' willingness-to-pay for service quality in benchmarking models on cost efficiency of distribution networks in Norway using the DEA technique. The results showed that the introduction of service quality regulation had no conflict with and impact on the performance and cost efficiency of the network utilities.…”

Section: Relevant Literature Reviewmentioning

confidence: 99%

Incentive regulation and utility benchmarking for electricity network security

Nepal

Jamasb

2015

Economic Analysis and Policy

Self Cite

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Use policyThe full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details. AbstractThe incentive regulation of costs related to physical and cyber security in electricity networks is an important but relatively unexplored and ambiguous issue. These costs can be part of cost efficiency benchmarking or, alternatively, dealt with separately. This paper discusses the issues and proposes options for incorporating network security costs within incentive regulation in a benchmarking framework. The relevant concerns and limitations associated with the accounting and classification of network security costs, choice of cost drivers, data adequacy and quality and the relevant benchmarking methodologies are discussed. The analysis suggests that the present regulatory treatment of network security costs using benchmarking is limited to being an informative regulatory tool rather than being deterministic. We discuss how alternative approaches outside the benchmarking framework, such as the use of stochastic cost-benefit analysis and cost-effectiveness analysis of network security investments can complement the results obtained from benchmarking.Keywords: benchmarking; network security; incentive regulation; exceptional events JEL Classification: L94, L51, L98 *Corresponding author. School of Business, Charles Darwin University, Email: rabindra.nepal@cdu.edu.au, Phone: +61 (0)

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A hierarchical approach to designing an electricity distribution reward‐penalty scheme for service quality improvement

Ghasemi

Dashti

Amirioun

2021

Int Trans Electr Energ Syst

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In each regulatory period, the parameters of the reward and penalty scheme (RPS) vary based on the investment made by electricity distribution companies (EDCs) and imposed costs. In this paper, a novel dynamic model for determining the RPS parameters for each EDC is presented. This new model has three stages: (i) determination of the RPS parameters for the first regulatory period, (ii) the RPS decision-making model, and (iii) determination of the RPS parameters for the subsequent regulatory period. The proposed model was implemented for Iranian EDCs. Results verified the effectiveness of the proposed model in enhancing distribution system reliability.

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Social Cost Efficient Service Quality: Integrating Customer Valuation in Incentive Regulation—Evidence from the Case of Norway

Cited by 5 publications

References 13 publications

Output-based incentive regulation in electricity distribution: Evidence from Italy

Output-based incentive regulation in electricity distribution: Evidence from Italy

Incentive regulation and utility benchmarking for electricity network security

A hierarchical approach to designing an electricity distribution reward‐penalty scheme for service quality improvement

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