Productivity development of Swedish distribution system operators in the 21st century : application of the Malmquist index

Abstract

Nowadays, Data Envelopment Analysis (DEA) is a well-established practice to apply in network regulation. More specifically, DEA can turn out to be a proper tool to evaluate the productivity development of an industry. From the Network Performance Assessment Model to the Revenue Cap Model and passing through a low-powered rate-of-return regime, Sweden experienced a broad range of regulatory scheme. This study is the opportunity to evaluate the impact on the industry of the two mentioned regulatory schemes. Through a Malmquist productivity index, our study encompasses a productivity analysis of the Swedish electricity distribution sector from 2002 to 2017. Besides, a Kruskal-Wallis test and a Tobit regression helped us evaluate if factors such as the ownership type or the customer density could have an influence on the performances of the operators. Among other results, we have demonstrated the low-robustness of the Network Performance Assessment Model and the stability of the industry from the establishment of the Revenue Cap Model onwards. Recommendations to the Swedish Energy Inspectorate are also given such as a revision of the general efficiency requirement imposed to the operators or the inclusion of environmental variables. Furthermore, the results have shown that it is likely that private operators present better performances than municipally-owned and cooperative operators.