DEA window analysis and Malmquist index to assess efficiency and productivity in the Spanish electricity sector

Abstract

Purpose The purpose of this paper is to demonstrate that overcapacity and tariff deficit (external constraints) negatively affect the efficiency of distribution firms in the Spanish electricity sector. To do this, the paper is based on the theory of constraints and theory of economic regulation. Design/methodology/approach Data envelopment analysis (DEA) window methodology is carried out on the constant scales (I-C) with a sample consisting of five main distribution firms during the period from 2006 to 2015. In turn, an analysis of the Malmquist index is carried out to assess whether it has had a displacement with respect to the efficiency frontier. Findings The results show that the overcapacity and the tariff deficit negatively affect the efficiency of the distribution firms of the Spanish electricity sector. In addition, there is an existence of external constraints that affect the activities of regulated organisations and the importance of adequate legislation in regulated sectors. Originality/value This study defines a model that shows how the efficiency problems associated with electricity distribution companies such as productive overcapacity or tariff deficit can be measured based on the theory of constraints and theory of economic regulation.

Window Analysis and MPI for Efficiency and Productivity Assessment Under Fuzzy Data

“…Nandy and Singh (2021) employed a combination of fuzzy data envelopment analysis approach to yield crisp DEA efficiency values by converting the fuzzy DEA model into a linear programming problem and machine learning algorithms for better evaluation and prediction of the variables affecting the farm efficiency. Sánchez-Ortiz et al (2021) employed DEA window analysis and Malmquist index to assess efficiency and productivity in the Spanish electricity sector The study defined a model that showed how the efficiency problems associated with electricity distribution companies such as productive overcapacity or tariff deficit can be measured based on the theory of constraints and theory of economic regulation.…”

Ranking EU Agricultural Sectors under the Prism of Alternative Widths on Window DEA

“…Changing window width would not lead to radical changes, because of the relative short period of time analyzed. Another study that has implemented Window DEA methodology for energy efficiency in the Spanish electricity sector, used an arbitrary window width of five years for an overall 9-year-period (2006-2015) [53]. A similar approach with this paper has been followed for the assessment of dairy farming system in Iran, exploring differences between different window widths when using Window DEA [54].…”

Analysing the Pattern of Productivity Change in the European Energy Industry

“…Their research mainly reports on intertemporal efficiency. Sanchez-Ortiz et al [15] studied the efficiency and productivity of five Spanish electricity distribution companies, also using DEA and MPI analysis. They found overall positive efficiency and concluded that overcapacity and tariff deficits have a negative impact on firm efficiency.…”

“…However, to the best of our knowledge, there have been no studies analysing productivity changes in the European energy industry. Only its subsectors have been the subject of such analyses [13][14][15]. This is surprising, especially from a policy point of view, considering that the EU wants to take further steps towards an integrated energy market and a common energy policy.…”