The effects of environmental regulation on the efficiency of distribution electricity companies in Spain

Abstract

The objective of this work is to detect what problems of inefficiency electricity distribution companies have, in order to disseminate this information and to allow distributors and public agencies to be more precise in calculating their costs. In turn, this will have an indirect impact on the price of the kilowatt in order to try to reduce its volatility. It should be noted that the volatility of the kilowatt price is mainly due to distribution costs and more specifically to access tolls.

In the present paper, knowing that the distribution activity is a regulated activity, the efficiency in the electricity distribution companies will be studied. To this end, a study has been carried out on the efficiency of the main electricity distribution companies in Spain (Endesa, Iberdola, Union Fenosa, EDP and Viesgo) during the period of 2006-2015. The technique used was the Multi-period efficiency measurement in Data Envelopment Analysis, an input-oriented model at constant scales, working with panel data.

The conclusions in this paper indicate that Spanish electricity distribution companies could improve their levels of efficiency if they improve the use of some inputs. This analysis demonstrates that overcapacity and deficit tariff have a negative influence on the efficiency level.

Finally, this paper is useful as it shows that regulation again plays an essential role in regulated activities, requiring a commitment on the part of the State in order to improve efficiency in regulated activities