GRIPS 政策研究センター Policy Research Center


Jul 1, 2007 Report No:07-03

Application of Network DEA Model to Vertically Integrated Electric Utilities

  • Miki TsutsuiCentral Research Institute of Electric Power Industry
  • Tone KaoruGRIPS
Field Multi Disciplinary policy studies
Language English

Liberalization of the electric power industry has been underway in various countries.
Under this situation, it is necessary for electric power companies to improve their
management efficiency in order to survive in a competitive market. This study examines
management efficiency of vertically integrated electric companies, which consist of
several divisions, such as generation, transmission, distribution and so forth. Previous
studies mainly focused on efficiency of only a specific division independently. However,
we should evaluate firm-level management efficiency based on divisional efficiencies,
because these divisions are closely linked each other. For measuring firm-level
efficiency, we apply a network DEA model that considers a streamlined relationship
among divisions under vertical integration. Furthermore we newly proposed a
constrained network DEA model to obtain more practical efficiency index.

Keywords Network DEA, electric utilities, vertical integration
attachment 07-03.pdf