K u rzfassu n g sb an d - Graz University of Technology

128 Energieinnovation 2006
5.2.4 „Dynamic Efficiency Analysis of Polish Electricity Distribution
Utilities - Is Transition Efficiency Enhancing“
Astrid Cullmann (DIW – German Institute for Economic Research) 1 ,
Christian von Hirschhausen (Dresden University of Technology) 2
Abstract
As the liberalization and regulation of European electricity markets is proceeding, so are the scientific
methods to assess the productivity of electricity companies. This paper highlights the relevance of
quantitative efficiency studies for the regulation process of electricity distribution utilities. As the
European Union is extending eastwards, there is an increased need to integrate the new member
states’ industry in European-wide competitiveness and performance measurement.
This paper is the first dynamic efficiency analysis of electricity distribution in Poland, the largest
electricity producer and distributor in Central Europe. We consider a panel of 33 distribution utilities
operating over a seven-year period (1997-2003). We compare the relative efficiency of regional
distribution companies (RDCs) using common benchmarking methods: the non-parametric Data
Envelopment Analysis (DEA), the non-parametric Free Disposal Hull (FDH), and, as a parametric
approach, the Stochastic Frontier Analysis (SFA). Sensitivity analysis for the non parametric efficiency
estimates is conducted by means of the bootstrap method described by Simar and Wilson (1998). This
paper discusses and applies alternative approaches and specifications for panel data models
including technical and geographical as well as monetized cost data. Following e.g. Greene (2005) we
apply econometric frontier models to distinguish unobserved firm-specific heterogeneity from
inefficiency. Further we measure and decompose productivity change with Malmquist indices. First
results indicate that the Polish distribution companies are cost inefficient. The presence of increasing
returns to scale indicates that the regulatory authority should consider inducing the merger process of
small electricity distribution companies into larger units.
Besides the application of efficiency benchmarking to the Polish electricity sector, the paper also
shows advanced quantitative approaches that will be increasingly used in other EU countries as well.
Keywords: Efficiency analysis, econometric methods, electricity distribution, Poland, DEA, SFA
JEL Classification: L51, L43, P31, C1
Astrid Cullmann is Research Associate at DIW Berlin, the German Institute for Economic Research;
specialization in efficiency analysis of German ( “Applied Economics”, 2005) and East European
electricity utilities (Poland, Hungary, Czech Republic, Slovakia).
Christian von Hirschhausen is Professor of Energy Economics and Public Sector Management at
Dresden University of Technology, and Research Professor at DIW Berlin. Recent work on efficiency
measurement of German electricity distribution companies.
1 Dept. of International Economics, DIW Berlin (German Institute for Economic Research);
Koenigin-Luise-Str. 5, D- 14195 Berlin (Germany); Tel.: +49-30-89789-247;
e-mail: acullmann@diw.de, Url: www.diw.de;
2 TU Dresden, Lehrstuhl für Energiewirtschaft, 01062 Dresden;
e-mail: cvh@mailbox.tu-dresden.de, Url: www.ee2.biz;