Benchmarking and incentive regulation of quality of service: an application to the UK electricity distribution utilities

Quality of service has emerged as an important issue in post-reform regulation of electricity distribution networks. Regulators have employed partial incentive schemes to promote cost saving, investment efficiency, and service quality. This paper presents a quality-incorporated benchmarking study of the electricity distribution utilities in the UK between 1991/92 and 1998/99. We calculate technical efficiency of the utilities using Data Envelopment Analysis technique and productivity change over time using quality-incorporated Malmquist indices. We find that cost efficient firms do not necessarily exhibit high service quality and that efficiency scores of cost-only models do not show high correlation with those of quality-based models. The results also show that improvements in service quality have made a significant contribution to the sector�s total productivity change. In addition, we show that integrating quality of service in regulatory benchmarking is preferable to cost-only approaches

'Core Indicators for Determinants and Performance of Electricity Sector in Developing Countries’

Since the early 1990s, substantial resources and effort have been spent on implementing market-oriented electricity reform in developing countries. Important sectoral, economic, and social dimensions are involved in electricity reform, but empirical analysis and evaluation have been of limited use for testing the economic rationale of reform and policy advice. This may partly be attributed to a lack of generally accepted and measured indicators for monitoring progress, impact and performance, unlike areas such as health, education, environment, sustainable development. In this paper we propose a set of indicators as a first step towards filling this gap and developing a coherent framework for studying electricity reform in developing countries covering resource and institutional endowments, key reform steps, market structure, performance, and various impacts.Electricity, Reform, developing countries

Benchmarking and incentive regulation of quality of service: an application to the UK electricity distribution utilities

Quality of service has emerged as an important issue in post-reform regulation of electricity distribution networks. Regulators have employed partial incentive schemes to promote cost saving, investment efficiency, and service quality. This paper presents a quality-incorporated benchmarking study of the electricity distribution utilities in the UK between 1991/92 and 1998/99. We calculate technical efficiency of the utilities using Data Envelopment Analysis technique and productivity change over time using quality-incorporated Malmquist indices. We find that cost efficient firms do not necessarily exhibit high service quality and that efficiency scores of cost-only models do not show high correlation with those of quality-based models. The results also show that improvements in service quality have made a significant contribution to the sector’s total productivity change. In addition, we show that integrating quality of service in regulatory benchmarking is preferable to cost-only approaches.quality of service, benchmarking, incentive regulation, data envelopment analysis, electricity

‘Electricity Sector Reform in Developing Countries: A Survey of Empirical Evidence on Determinants and Performance’

This paper reviews the empirical evidence on electricity reform in developing countries. We find that country institutions and sector governance play an important role in success and failure of reform; reforms appear to have increased operating efficiency and expanded access to urban customers; they have to a lesser degree passed on efficiency gains to customers, tackled distributional effects, or improved rural access. Moreover, some of the literature is not methodologically robust or on a par with general development economics literature and findings on some issues are limited and inconclusive while some important areas are yet to be addressed. Until we know more, implementation of reforms will be more based on ideology and economic theory rather than solid economic evidence.Electricity, reform, developing countries

Anxiety symptoms as a predictor of head and neck cancer survival and potential for mediation by cancer treatment response.

BACKGROUND: Head and neck cancers (HNC) are associated with high rates of depression, which seems to affect overall survival. However, little attention has been paid to the effects of anxiety on overall survival, though anxiety has been shown to activate inflammatory pathways implicated in cancer symptom development and progression. Here it was hypothesized that higher pre-treatment anxiety levels in HNC patients would predict poorer overall two-year survival and a higher likelihood of subsequent HNC treatment failure. Additionally, we expected that the relationship between higher pre-treatment anxiety and poorer two-year overall survival would be mediated by treatment failure. METHODS: Patients (n = 242) reported anxiety symptomatology via the GAD-7 at treatment planning. Clinical data were reviewed at treatment completion, six-month, and two-year follow-up. RESULTS: Higher pre-treatment anxiety levels were not associated with significantly poorer two-year overall survival (hazard ratio [HR], 1.032; 95% confidence interval [CI], 0.995 – 1.070, p = 0.094). The association between GAD-7 total scores (mean centered) and treatment response was also nonsignificant (B = 0.006; odds ratio [OR], 1.006; 95% CI, 0.959 – 1.055, p = 0.805). Therefore, criteria for the mediation of pre-treatment anxiety levels and two-year overall survival by treatment response were not met, and the presence of a mediating relationship could not be tested. However, when transformed into a categorical variable, a significant relationship between only the Moderate category of anxiety and two-year overall survival was shown (HR, 2.827; 95% CI, 1.209 – 6.609; p = 0.016). The associations between all other GAD-7 score categories and treatment response returned non-significant (Very Minimal odds ratio [OR] = 1.295; 95% confidence interval [CI] = 0.523 – 3.206, Mild OR = 1.280; CI = 0.482 – 3.397, Moderate OR = 1.477; CI = 0.551 – 3.959, Severe OR = 1.067; CI = 0.366 – 3.109). CONCLUSIONS: Most head and neck cancer patients experience anxiety in the treatment planning phase, though only those who scored in the Moderate category of the GAD-7 appeared to have significantly poorer two-year overall survival. Screening anxiety with another questionnaire such as the State-Trait Anxiety Inventory may be beneficial to future studies assessing the relationship between anxiety and survival if multiple measurements are taken during and after treatment

The political economy of carbon pricing: a panel analysis

In virtually all jurisdictions that explicitly price carbon, its average (emissions-weighted) price remains low. Our analysis focuses on the political economy of its introduction as well as its stringency in an international panel of national and North American subnational jurisdictions. Results suggest that political economy factors primarily a ected the former and that policy stringency is a highly persistent process. This has two important policy implications. First, successful passage of carbon pricing legislation will either come with contemporaneous compensation of incumbent, CO2-intensive, sectors or occur after their relative weakening. Second, if political economy constraints continue to prevail, a robust rationale for the design of climate change mitigation strategies with multiple instruments exists.ESRC PhD studentshi

Building performance evaluation and certification in the UK: a critical review of SAP?

Improving the efficiency and performance of the UK residential sector is now necessary for meeting future energy and climate change targets. Building Performance Evaluation and Certification (BPEC) tools are vital for estimating and recommending cost effective improvements to building energy efficiency and lowering overall emissions. In the UK, building performance is estimated using the Standard Assessment Procedure (SAP) for new dwellings and Reduced SAP (RdSAP) for existing dwellings. Using a systems based approach we show there are many opportunities for improving the effectiveness of BPEC tools. In particular, if the building stock is going to meet future energy and climate change targets the system driving building energy efficiency will need to become more efficient. In order to achieve this goal, building performance standards across Europe are compared highlighting the most effective strategies where they are found. It is shown that the large variance between estimated and actual energy performance from dwellings in the UK may be preventing the adoption of bottom-up energy efficiency measures. We show that despite popular belief, SAP and RdSAP do not estimate building energy efficiency but instead attempt to estimate the cost-effective performance of a building and thus create perverse incentives that may lead to additional CO2 emissions. In this regard, the SAP standard confounds cost-effectiveness, energy efficiency and environmental performance giving an inadequate estimate of all three policy objectives. Important contributions for improving measurement, analysis, synthesis and certification of building performance characteristics are offered.Efficienc

Financing low-carbon generation in the UK: The hybrid RAB model

Decarbonising electricity is a critical first step in mitigating climate damage but low/zero-carbon generation is very capital intensive. Its cost depends critically on the weighted average cost of capital (WACC). Three factors combine to make a low WACC both desirable and feasible in the UK. First, the Stern Report argues for a low social discount rate (1.4% real) for investments in climate mitigation. Second, global and UK real interest rates have been falling steadily - UK gilt index-linked 20-year rates have fallen from +4% in 1995 to -2% (negative) in 2019. CCS and nuclear have long lifetimes over which to recover their capital cost, longer than commercial finance would accept without guarantees, in contrast to renewables where off-take contracts have proven sufficient. Nuclear power faces the additional investment challenge of lengthy uncertain construction. No nuclear plant has ever been built privately without substantial regulatory guarantees. The Regulated Asset Base (RAB) model can address these financing problems for long-lived low-carbon assets. The benefits of placing risk on developers to motivate cost control are small compared to the extra costs of a higher weighted average cost of capital (WACC). A hybrid RAB model (like that used for the Thames Tideway Tunnel)—with excess cost sharing and a cost cap—can reduce risk to deliver an adequately low WACC by accessing infrastructure funds that do not require extensive specialised project knowledge. If the risk of excess costs is spread over the 27 million households and other customers taking two-thirds of electricity, each would bear minimal risk and the cumulative cost would be significantly lower. The levelized cost at the WACC (3.5% real) is £53/MWh if on time and budget, which should be compared with a counterfactual in which all the risk is placed on the company requiring a contract-for-difference with a strike price of £96/MWh for the life of the project (equal to the levelized cost). The levelised cost to consumers if on time and budget would be £50/MWh and in the worst case with a 48% cost over-run, £64/MWh

A panel model for predicting the diversity of internal temperatures from English dwellings

Using panel methods, a model for predicting daily mean internal temperature demand across a heterogeneous domestic building stock is developed. The model offers an important link that connects building stock models to human behaviour. It represents the first time a panel model has been used to estimate the dynamics of internal temperature demand from the natural daily fluctuations of external temperature combined with important behavioural, socio-demographic and building efficiency variables. The model is able to predict internal temperatures across a heterogeneous building stock to within ~0.71°C at 95% confidence and explain 45% of the variance of internal temperature between dwellings. The model confirms hypothesis from sociology and psychology that habitual behaviours are important drivers of home energy consumption. In addition, the model offers the possibility to quantify take-back (direct rebound effect) owing to increased internal temperatures from the installation of energy efficiency measures. The presence of thermostats or thermostatic radiator valves (TRV) are shown to reduce average internal temperatures, however, the use of an automatic timer is statistically insignificant. The number of occupants, household income and occupant age are all important factors that explain a proportion of internal temperature demand. Households with children or retired occupants are shown to have higher average internal temperatures than households who do not. As expected, building typology, building age, roof insulation thickness, wall U-value and the proportion of double glazing all have positive and statistically significant effects on daily mean internal temperature. In summary, the model can be used as a tool to predict internal temperatures or for making statistical inferences. However, its primary contribution offers the ability to calibrate existing building stock models to account for behaviour and socio-demographic effects making it possible to back-out more accurate predictions of domestic energy demand

2010 EPRG Public Opinion Survey: Policy Preferences and Energy Saving Measures

This paper presents results of the 2010 Electricity Policy Research Group (EPRG) public opinion survey. The survey examines the energy policy preferences and attitudes of the British public, the potential for consumer engagement and consumer acceptance of various energy demand response activities. Wherever possible, comparisons were made to EPRG public opinion surveys from 2006 and 2008. Since the global financial crisis of 2008, energy and environmental concerns have decreased in priority, and respondents are more sceptical about government interventions in electricity markets. The share of individuals reporting that they are experiencing serious hardship due to energy prices has gone down from the 2008 level. While roughly half of the respondents would agree to have detailed metered consumption information recorded by their energy providers, they are even more wary about making data available to other entities. Local ownership is a potential motivating factor for public support for local small-scale energy plants. Energy efficiency measures had higher uptake than in previous years, but the widespread measures are typically cheaper and easiest to implement. There is scope for shifting discretionary electricity load to off-peak hours through both Time-of-Use tariffs and smart appliances that require limited user intervention.Time-of-use tariff