An Analysis of Electric Power Regulatory Agencies

Abstract

In this paper, I observe the efficiency of electric power regulatory agencies, which are essential for liberated electric power sectors. Using the results of an original survey made in 2005-2006 on the regulatory agencies of 49 countries, the efficiency was compared between countries, using both DEA (Data Envelopment Analysis) and SFA (Stochastic Frontier). Factors of efficiency were also observed. From the data obtained by questionnaires, a large structural difference was recognized between the developing countries, countries in transition, and developed countries. In addition, by observing the factors of efficiency differences, higher GDP per capita and higher level of democratization contributed to the efficiency of regulatory agencies. The results show that the larger dependence on the budget from customer charge, and the larger the number of functions, the efficiency is getting worse. This means that to increase efficiency scores, it is imperative to develop economy and improve democratization, but to realize independence of regulatory agencies, it needs to lessen the number of functions, and to depend on the governmental budget. However, regulatory agencies in both developed countries and developing countries are required to respond to more complex tasks and to be financially independent. This brings the need to take a balance in trading off of the finance, efficiency, and management of necessary functions highly important.