Measuring efficiency and productivity change (PTF) in the Peruvian electricity distribution companies after reforms

This paper analyzes the evolution of productivity of the electricity distribution companies in Peru, to assess whether reforms have improved the efficiency in this sector. The paper also identifies potential sources of productivity changes, based on market restructuring the electricity sector and changes in property. To do this, we rely on a set of data for 14 distribution companies, for the period 1996–2006. Our analysis suggests that improvements in the efficiency and productivity of electricity distribution in Peru have occurred, and that there is a relationship between the restructuring of distribution sector and the enhancement of productivity.     

Assessing the impact of regulatory reforms on China's electricity generation industry

In the past two decades, China has experienced a series of regulatory reforms in its electricity industry, aimed at improving power production efficiency. The central planning system was broken up and the market-oriented modern enterprise system was established. Furthermore, the former vertically integrated electricity utilities were divested and the generation sector was separated from the transmission and distribution networks. In this paper, we intend to estimate the impact of regulatory reforms on production efficiency of fossil-fired generation plants using the plant-level national survey data collected in 1995 and 2004. Applying the econometric method of Differences-in-Differences, we estimate the effects of these reforms on the demand for inputs of employees, fuel and nonfuel materials. The results show that the net efficiency improvement in labor input associated with the regulatory reforms is roughly 29% and the gains in nonfuel materials are about 35%, while there is no evidence of efficiency gains in fuel input associated with the electricity reforms.     

Impacts on investments,and transmission/distribution loss through power sector reforms

This study analyses original panel data from 86 countries between 1985 and 2006. Econometric methods were used to identify the effects of different policy devices of power sector reforms on performance indicators (installed capacity per capita, transmission and distribution loss) in the countries analyzed. The research findings suggest that reform variables such as the entry of independent power producers (IPPs), unbundling of generation and transmission, establishment of regulatory agencies, and the introduction of a wholesale spot market are the driving forces of increasing generation capacity, as well as reducing transmission and distribution loss in the respective regions. In this study, we can assume that, firstly, different electric industry’s reform policies/measures have different impacts on geographically and economically diverse countries. Secondly, a country’s state of economic development has a different impact on policy effects of reforms. Thirdly, coexistent with independent regulatory agencies, reform policy becomes more powerful in realizing sector performances.     

The effects of electricity reforms on productivity and efficiency of China's fossil-fired power plants: An empirical analysis

This paper investigates the effects of electricity reforms on productivity and efficiency of China's generation plants, based on the third industrial census data and the first economic census data. Partial factor productivity (PFP) analysis indicates that the productivity improvements in labor and capital inputs associated with the reforms are approximately 26% and 45% respectively. The effect of the reforms on fuel expense is weakly significant, but there is evidence of significant productivity improvement in fuel usage. Further total factor productivity (TFP) analysis shows that the efficiency gain from the reforms is still significant when the substitution effect of labor and capital inputs are considered, though the magnitude is much lower than that of the PFP analysis. The effect of the reforms on technical efficiency becomes weakly significant when fuel expense is further included in TFP analysis, but a significant positive effect is expected if fuel input is measured in physical quantity.     

Adoption of energy efficient technologies and carbon abatement: the electricity generating sector in India

A behavioral micro-economic framework was developed to analyze the impact of alternative mixes of policy reforms that eliminate existing regulatory distortions and a carbon emissions-tax on incentives to adopt energy efficient technologies and their implications for carbon emissions and output. An empirical application of this framework to the electricity-generating sector in India demonstrates that elimination of existing domestic and trade policy distortions has the potential to reduce carbon emissions even in the absence of an emissions-tax, by inducing the adoption of energy efficient technologies. In the presence of these policy reforms, an emissions-tax achieves a given level of abatement with higher output levels than in the absence of these reforms. This analysis indicates the potential for achieving a complementarity between the goals of reducing carbon emissions and increasing electricity generation by identifying the regulatory distortions that are hindering adoption of energy efficient technologies and tailoring policy reforms to specific distortions.     

Market distortions and aggregate productivity: Evidence from Chinese energy enterprises

Market distortions can generate resource misallocations across heterogeneous firms and reduce aggregate productivity. This paper measures market distortions and aggregate productivity growth in China's energy sector. We use the wedge between output elasticities and factor shares in revenues to recover a measure of firm-level market distortions. Using data on a large sample of Chinese energy enterprises from 1999 to 2007, our estimations provide strong evidence of the existence of both factor and product market distortions within and across China's various energy industries. The productivity aggregation and decomposition results demonstrate that the estimated aggregate productivity growth (APG) is, on average, 2.595% points per year, of which technological change, resource reallocation, and firm entries and exits account for 1.981, 0.068, and 0.546% points, respectively. The weak contributions of resource reallocation and firm turnover to APG are also found in energy sub-industries, except in the coal industry. Our research suggests that China's energy sector has major potential for productivity gains from resource reallocation through the reduction of market distortions.     

Energy consumption restricted productivity re-estimates and industrial sustainability analysis in post-reform China

This paper investigates the impact of energy on China's industrial sustainability by using a novel approach to estimate real total factor productivity. The growth accounting indicates that the substantial industrial reforms in China have led to productivity growth. Energy and capital are also important factors driving China's industrial growth. Productivity growth in China's industry is mostly attributable to the high-tech light industrial sectors.     

What happened to efficiency in electricity industries after reforms?

The last two decades have witnessed widespread power market reforms in both developed and developing countries that have cost billions of dollars. Among the key aims (and assumptions) of these reforms, there has always been realization of improvements in power sector efficiency. This paper questions the validity of this hypothesis. Using panel data from 92 countries covering the period 1982–2008, empirical models are developed and analyzed. The research findings suggest that the impact of the reforms on electricity industry performance is statistically significant but also limited. The results imply that, after controlling for country-specific variables, application of liberal market models in electricity industries slightly increases efficiency in power sector. Besides, we detect a positive relationship between reform process and the percentage share of network (transmission and distribution) losses in total electricity supplied, meaning that as countries take more reform steps the network losses as a fraction of power generated tend to increase. Moreover, the study puts forward that income level and other country specific features are more important determinants of industry efficiency than the reform process. Overall, contrary to expectations of substantial increases in sector efficiency, the paper concludes that introducing a decentralized market model with competition in the electricity sector has a limited increasing effect on power industry performance.     

尼日利亚新石油工业法案及面临的挑战

近年来,尼日利亚政府拟出台新的石油工业法案,通过改革解决油气工业领域存在的种种问题和矛盾。改革的主要目的在于促进尼日利亚油气工业更加透明,创造公开、公平的竞争环境,增加国家油气收入,提高对外国投资者的吸引力,促进本地化发展。新法案的改革内容主要是财税制度改革和制度与政策改革。制度与政策改革的核心是经营权与监管权的分离,并围绕监管和商业运作两个主题建立机构。财税制度改革的核心目标是简化政府石油收入的征收方式,分享油公司在高油价下的暴利,从深水区和资源潜力巨大区域获取更多的收入,通过鼓励边际油田和天然气领域投资,创造更多的就业和商业机会。不过,新法案严苛的财税条款受到国际石油公司的激烈抵制,尼日利亚南北方、地区、部族之间围绕石油利益分配陷入博弈困局,许可证授予与管理的公开性和透明度也广受诟病。新法案的出台恐怕仍然需要一个漫长的过程。新法案的久拖不决、政策的不确定性以及日益严峻的社会安全形势,使得一些国际石油公司已着手优化在尼油气资产,这对于中国石油企业来说既是重要机遇又具有极大挑战。     

From state monopoly to renewable portfolio: Restructuring China's electric utility

Deregulation and decentralization in the electricity sector have thrived worldwide since the early 1980s. China also started restructuring its electricity industry since the mid-1980s. The reform shares many common features with restructuring practices in other countries and exhibits some unique characteristics as well. To some extent, two features, namely governmental administrative departments’ dual role of government and business inherited from a highly centralized planned economy, and the coal-intensive nature of power generation, has determined many aspects of the evolution of China's electric power sector. This paper aims to provide a comprehensive account of the process with some emphasis on recent developments. We also identify some of the features that are similar to electricity market reforms in other countries and, most importantly, those that characterize the uniqueness of the restructuring practices in China's electricity industry through investigating the administrative framework, price and investment mechanisms, and associated legislation and policy settings at each of the five stages in the evolution of the electric utility sector. The paper concludes with a discussion and summary of some generic characteristics and remaining challenges.     

Estimation on oil demand and oil saving potential of China's road transport sector

China is currently in the stage of industrialization and urbanization, which is characterized by rigid energy demand and rapid growth of energy consumption. Therefore, energy conservation will become a major strategy for China in a transition to low-carbon economy. China's transport industry is of high energy consumption. In 2010, oil consumption in transport industry takes up 38.2% of the country's total oil demand, of which 23.6% is taken up by road transport sector. As a result, oil saving in China's road transport sector is vital to the whole nation. The co-integration method is developed to find a long-run relationship between oil consumption and affecting factors such as GDP, road condition, labor productivity and oil price, to estimate oil demand and to predict future oil saving potential in China's transport sector under different oil-saving scenarios. Monte Carlo simulation is further used for risk analysis. Results show that under BAU condition, oil demand of China's road transport sector will reach 278.5 million ton of oil equivalents (MTOE) in 2020. Oil saving potential will be 86 MTOE and 131 MTOE under moderate oil-saving scenario and advanced oil-saving scenario, respectively. This paper provides a reference to establishing oil saving policy for China's road transport sector.     

Cost functions and the electric utility industry. A contribution to the debate on deregulation

This study analyses the main articles that estimate cost functions in the electricity utility industry with a view to studying of the initial arguments for proposing competition and vertical disintegration. The works reviewed here, in general terms, confirm the initial arguments in favour of the deregulation process, mainly, the exhaustion of scale economies for moderate size firms in generation and the condition of natural monopoly for transmission and distribution. However, the savings obtained from undertaking different activities together should be kept in mind when restructuring the sector. On the other hand, the improvements in productivity deriving from the reforms have not translated into reductions in the price of electricity in many countries. These last two results suggest the need for appropriate market regulation for the deregulation process to translate into an improvement in how the sector works and into benefits for consumers. There is still insufficient empirical literature on these issues due to the fact that the process is still ongoing in many countries and more time will have to transpire before sufficient data is available.     

Power sector reform in India: current issues and prospects

Power sector reforms in India were initiated at a juncture when the sector was plagued with commercial losses and burgeoning subsidy burden. Investment in the sector was not able to keep pace with growing demand for electricity. This paper takes stock of pre-reform situation in Indian power sector and identifies key concerns that led to initiation of the process of reform. The paper discusses major policy and regulatory changes undertaken since the early 1990s. The paper also illustrates changes in the market structure as we move along the reform process. We also discuss some of the major provisions of the recently enacted Electricity Act 2003 that aims to replace the prevailing acts which govern the functioning of the power sector in the country. In this context, we discuss two issues arising out of it, namely open access and multi-year tariff that we think would have a significant bearing on the performance of the sector in the near future. The paper also evaluates the reform process in the light of some of the regulatory changes undertaken. Finally, the paper briefly discusses the issues involved in introduction of competition in the power sector primarily through development of a market for bulk power.     

Electricity regulation and electricity market reforms in China

The electricity industry of China has been in a process of reforms since the 1980s. This paper gives a review on the three main stages of reforms in China so as to trace out key features of various reform measures including those for power investment financing, the separation between government and power enterprises, and the division between power generation firms and power grids. The findings suggest that further regulatory change in China's electricity market reform is necessary when integration of the electricity markets and increased competition are paving the way ahead for a market-oriented structure. Prospective electricity regulation in the form of a strong legal system and effective institutions that protect market competition and promote appropriate incentives for efficiency are suggested in the paper.     

Mapping of combined heat and power systems in cane sugar industry

Cogenerating systems based on steam turbines (1–20 MW_t) are indispensable when the source of energy is a solid fuel such as bagasse as in a sugar industry. These systems provide a wide range of heat to power ratios from 0 to as high as 100. The energy productivity of sugar plants differ vastly because of variations in equipment efficiency, system configuration and operating steam conditions. In this paper a mapping of the entire operating range of steam based combined heat and power plants spanning pure back pressure to pure condensing environments, based on standard steam conditions in installations and efficiencies which are currently being achieved experimentally, is presented. This will enable the rational choice of combinations, which will yield the best economic advantage. As the operating steam pressure is increased (and consequently the matching superheated temperatures) the in-house steam requirement reduces drastically and simultaneously the exportable power increases. Improvements in the systems by the use of advanced designs of steam turbines and introduction of information technologies and associated supervision control and data acquisition, energy management system, multi-media interaction, etc., is also briefly highlighted. The maximum exportable electrical power from a sugar mill after meeting the internal requirement is around 146 kW h/t of cane. The maximum exportable of steam (no power export) is around 0.65 t/t of cane.     

Towards a competitive market for electricity and consumer choice in the Indian power sector

The initial phase of reforms in the Indian power sector was primarily aimed at bringing regulatory reforms and unbundling of the vertically integrated State Electricity Boards (SEBs). Enactment of the Electricity Act 2003 led to deepening of the reform process by dismantling this monopoly in the power sector. Primary issues emerging on account of transition from a single-buyer model to a multi-buyer multi-seller model include, among others, policy and regulatory initiatives related to open access, power exchanges, and transmission allocation and its pricing. The paper provides an overview of the status of competition in various segments of the power sector. It also reviews the phased program for open access outlined by various State Electricity Regulatory Commissions, including their status and impact on competition. The paper highlights a number of residual issues for the wholesale and retail competition, and also discusses the approach to address the same. These include liberalization of fuel markets, market monitoring, unbundling of retail tariffs, universal service obligation, supplier of last resort and demand response.     

Short-term impact of green certificates and CO2 emissions trading in the Swedish district heating sector

Swedish district-heating (DH) systems use a wide range of energy sources and technologies for heat-and-power generation. This provides the DH utilities with major flexibility in changing their fuel and technology mix when the economic conditions for generation change. Two recently introduced policy instruments have changed the DH utilities’ costs for generation considerably; the tradable green-certificate (TGC) scheme introduced in 2003 in Sweden, and the tradable greenhouse-gas emission permit (TEP) scheme introduced in the EU on January 1, 2005. The objective of this study is to analyse how these two trading schemes impact on the operation of the Swedish DH sector in terms of changes in CHP generation, CO₂ emissions, and operating costs. The analysis was carried out by comparing the most cost-effective operation for the DH utilities, with and without, the two trading schemes applied, using a model that handles the Swedish DH-sector system-by-system. It was found that the volume of renewable power generated in CHP plants only increased slightly owing to the TGC scheme. The TGC and the TEP schemes in force together, however, nearly doubled the renewable power-generation. CO₂ emissions from the DH sector may either increase or decrease depending on the combination of TGC and TEP prices. The overall CO₂ emissions from the European power-generation sector would, however, be reduced for all price combinations assuming that increased Swedish CHP generation replaces coal-condensing power (coal-fired plants with power generation only) in other European countries. The trading schemes also lower the operational costs of the DH sector since the cost increase owing to the use of more expensive fuels and the purchase of TEPs is outweighed by the increased revenues from sales of electricity and TGCs.     

Power sector reforms in Ethiopia: options for promoting local investments in rural electrification

An estimated 13% of Ethiopia's population has access to electricity. Almost all electrified centres are urban, with rural areas as well as most small rural towns largely unelectrified. Rural electrification (RE) thus remains a major challenge to the power sector of Ethiopia. The national power utility (EEPCO) has traditionally been assigned the task of electrifying rural demand centres. EEPCO has, however, concentrated on the more developed and profitable urban areas. The objective of this article is to present the findings of a study that examined whether the ongoing power sector reforms in Ethiopia can attract private investment in RE as an alternative to the sole reliance on EEPCO. Initial findings of the study indicate that private investment in RE can be enhanced with some improvement in the legal and regulatory provisions, along with extension of technical assistance from EEPCO to private investors.     

Profitability and productivity changes in the Korean electricity industry

The Korean electricity industry saw significant changes following the reform in April 2001. Until the last decade, the industry was monopolized by the Korea Electric Power Corporation (KEPCO), a state-owned, vertically integrated company. The 2001 reform divided KEPCO's power generation division into six power generation companies (GENCOs), with the aim of improving efficiency and introducing competition in the electricity industry. In this study, we used capital total factor productivity (KTFP) to analyze profit changes from fixed input capital, and an index number profit decomposition (INPD) to examine the sources of the profit changes. We investigate the industry thoroughly from three points of view: the overall industry over time; the power generation sector by company; and the transmission and distribution sectors of the Korea Electric Power Corporation (KEPCO). Next, we measured how the profits from productivity growth were distributed to consumers, fuel suppliers, employees, and company owners. The results suggest that a more reasonable price system for both wholesale and consumer prices needs to be implemented prior to the privatization and deregulation of the Korean electricity industry.