What affects the efficiency of the operating costs of electrical energy distributors in BRAZIL? : an analysis using stochastic frontier

Abstract

The Brazilian electrical sector has faced many changes over the years. There have been transformations especially in the activities that involve the distribution of energy. This study measures the efficiency of the electricity distribution sector with expectations that this may help to establish patterns of quality and service improvement thus helping in the regulatory process. The objective of this study was to use benchmarking for panel comparisons, allowing us to compare the performance of the distributors in Brazil in different time periods. The idea was to estimate stochastic cost functions for 63 Brazilian distributors of electrical energy in the period between 2001 and 2012 using data obtained from ANEEL. These functions were used to calculate the efficiency of the firms and evaluate what causes inefficiency in operating costs. The results show that the operating costs are highly sensitive to increases in payroll and third party services. These two variables positively affected the dependent variable. The study also revealed that quality variables such as energy not distributed and DEC (duration of interruptions per consumer) can positively affect the efficiency of firms, though the results obtained for the latter were not as expected. Other quality variables such as FEC (number of interruptions per consumer) and technical losses seemed to negatively affect the efficiency of firms.