Rammevilkårenes betydning i en effektivitetsanalyse : en analyse av NVEs inntektsrammeregulering og nettselskapene i distribusjonsnettet

The main point for this thesis is to present a method for testing environmental factors in efficiency analysis. The test results will provide guidelines for whether the environmental factors are cost sources. In order to accomodate heterogeneity and individual effects, the significant environmental factors have a substantial impact on the efficiency results in the distribution grid. The thesis also deals with some known problems of a two-step method in DEA. The analysis is conducted on the same data set that NVE has applied in determination of the income cap for 2010. In the theory part, I present several different methods for the regulation of natural monopolies, with emphasis on the yardstick method used by NVE in the regulation of network companies in the distribution grid. I present two efficiency analysis, the non-parametric method data envelopment analysis (DEA) and the parametric stochastic frontier analysis (SFA). At the end of the theoretical section, I present a brief summary of the article "Valid tests of whether technical inefficiency depends on firm characteristics" (Kim and Schmidt 2008) which forms much of the basis for this thesis. The analysis focuses on three main models. One general model without environmental factors, a short-term and long-term model with environmental factors. All models are analyzed econometric and appropriate tests for panel data is used. The main point of the anaylsis is the testing environmental factors through a Wald test and efficiency analysis through SFA. Testing shows that there will be differences in the importance of the environmental depending on regulation by a short- or long-term model. The efficiency analysis also underlines this. Efficiency analysis also shows that there is a difference in the achieved efficiency with and without environmental factors. In the discussion section I discuss the results from the analysis along with relevant theory. Emphasis is placed on the inclusion of variables and the effects this has in terms of incentives. The fact that a variable is included in the model, the actual effectiveness will not be measured and the incentive will not be correct. Omission of an important environmental factor will have the same effect. If the excluded environmental factor is a variable does not affect costs, incentives could be correct. However, exclusion of a variable that affects costs, will lead to wrong incentives for the companies. In general it may be mentioned that the consequences are larger by omitting a significant environmental factor, than by including a non significant environmental factor. I also discuss the theoretical disadvantages of a two-step method. The probability that problems with omitted variables and biased results arises is large for a two-step method. I therefore do not recommend this method for regulation of network companies in the distribution grid. I conclude that the environmental factors have an important influence when it comes to account for individual effects. But they will have different influence depending on regulation by a short-term or long-term model. The importance of enironmental factor will also change when companies with high share of high-voltage subsea cable are excluded from the analysis. NVE should tjerefore consider new environmental factors that better describes the individual effects between companies that hav a low share of high-voltage subsea cable.