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

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  • Livingstone Senyonga and Olvar Bergland

Abstract

This study examines the hypothesis that changes to high-powered incentive regulations have a positive efficiency and productivity growth effects in a regulated electricity distribution industry. We estimate an input distance function using the stochastic frontier analysis method to compute technical efficiency scores for 121 Norwegian utilities over the period 2004-2012. We explore sources of productivity growth by parametrically decomposing the Malmquist productivity index into efficiency change, technical change, and scale change. Unlike previous studies, we examine the difference in performance across two regulatory regimes: yardstick competition (2007-2012) and RPI-X incentive regulation (2004-2006). Results show significant efficiency and productivity growth improvements with embodied technical change as the main driver.

Suggested Citation

  • Livingstone Senyonga and Olvar Bergland, 2018. "Impact of High-Powered Incentive Regulations on Efficiency and Productivity Growth of Norwegian Electricity Utilities," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
    • Handle: RePEc:aen:journl:ej39-5-senyonga
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    Cited by:

    1. Ajayi, Victor & Anaya, Karim & Pollitt, Michael, 2022. "Incentive regulation, productivity growth and environmental effects: the case of electricity networks in Great Britain," Energy Economics, Elsevier, vol. 115(C).
    2. Wenche Tobiasson & Manuel Llorca & Tooraj Jamasb, 2021. "Performance Effects of Network Structure and Ownership: The Norwegian Electricity Distribution Sector," Energies, MDPI, vol. 14(21), pages 1-15, November.
    3. Zhu, Runqing & Lin, Boqiang, 2021. "Energy and carbon performance improvement in China's mining Industry:Evidence from the 11th and 12th five-year plan," Energy Policy, Elsevier, vol. 154(C).
    4. Hou, Zheng & Roseta-Palma, Catarina & Ramalho, Joaquim J.S., 2024. "Can operational efficiency in the Portuguese electricity sector be improved? Yes, but..," Energy Policy, Elsevier, vol. 190(C).
    5. Bu, Lin-Lan & Kopsakangas-Savolainen, Maria & Xie, Bai-Chen & Li, Hong-Zhou & Liu, Yi-Meng & Yin, Shao-Peng, 2024. "Has benchmarking improved the performance of the Australian electricity distribution utilities? A meta-frontier model," Utilities Policy, Elsevier, vol. 88(C).

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    JEL classification:

    • F0 - International Economics - - General

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