private operators to increase shareholder value through cost inflation which has been passed on to users through higher tariffs.

Finally, many of the papers on Latin and South America have shown that it may be useful to try to distinguish between technological and efficiency changes. One of the main results in this context is that reforms contribute to improve both of these efficiency sources. The two studies by Pombo and Ramirez (2002, 2004) on Colombia are particularly well documented on this point.

**<u>Table 2: Energy</u>**

|**Region**|**Data**|<br>**Reference**|<br>**Method**|**Policy relevance**|
|---|---|---|---|---|
|World|768<br>thermal<br>power<br>plants<br>operating<br>in<br>14<br>countries,<br>including<br>South<br>Africa<br>and<br>Thailand<br>1989|Pollitt (1995)|SCF/DEA<br>with 2<sup>nd</sup>stage<br>regressions<br>Tobit|Finds that privatization does not lower costs in the short<br>run for the industry once allowance was made for<br>ownership, load or country. Government interference<br>with investment decisions do however increase costs.|
|World|111 electricity generation systems<br>1989-1995 (unbalanced panel)|Whiteman (1998)|DEA/SFP|Finds that levels in developing countries were very<br>roughly equivalent to those in Australia, Japan, the US<br>or lower than in Europe but much higher than in Canada<br>or the Asian Tiger economies (specific ranking driven<br>bymethod).|
|World|32<br>companies<br>from<br>Austria,<br>Netherlands,<br>UK<br>and<br>1<br>Argentinean|Frontier<br>Economics and<br>Macroconsulting<br>(2001)|DEA|Consultant report prepared for the regulator to<br>benchmark the performance of one Argentinean<br>distribution company in preparation for its price review.|
|LDCs|85 electricitysystems|Whiteman(1995)|DEA|Benchmarkingexercise.|
|LDCs|1. Cross-section of generation for<br>27 countries in 1987<br>2. Panel of electricity generating<br>utilities from Malaysia, Thailand<br>and the UK for 1975-1990period|Yumos and<br>Hawdon (1997)|DEA|Points to major efficiency gaps between small scale and<br>large providers; also finds that changes in ownership do<br>not resolve efficiency problems automatically when<br>there is no competition.|
|South<br>America|30 South American Distribution<br>companies from 10 countries<br>1994-1998|Rodriguez-<br>Pardina, Rossi and<br>Ruzzier(1998)|SPF|Assessment of average efficiency levels and growth<br>rates.|
|South<br>America|36 South American Distribution<br>companies from 10 countries<br>1994-1998|Rodriguez-Pardina<br>and Rossi (2000)|SPF/DEA|Separation of catching up and technological change<br>effect.|
|Latin<br>America|84 Latin American Distribution<br>companies<br>1994-2001|Estache, Rossi and<br>Ruzzier (2004)|SCF/DEA/<br>labor<br>requirement<br>function|Makes<br>the<br>case<br>for<br>an<br>international<br>yardstick<br>competition regulatory regime and discusses and<br>illustrates the implementation challenges in the context<br>of Latin America.|
|Latin<br>America|Panel of 127 Latin American<br>Distribution companies<br>1994-2001|Estache and Rossi<br>(2004)|Labor<br>requirement<br>function/SPF|Shows that productivity increases with degree of<br>incentives built in regulation. Private under rate of return<br>have at most similar laborproductivityaspublic firms.|
|Small<br>Island<br>Economies|Panel<br>data<br>of<br>generation<br>companies for 16 small island<br>economies<br>vs.<br>121<br>investors<br>owned US generators<br>1993-2000|Domah (2002)|DEA/SPF<br>with 2<sup>nd</sup>stage<br>regressions|Shows that use of non-small islands in benchmarking is<br>feasible and desirable.<br>Interconnection influences efficiency scores and changes<br>performance incentives.|
|Argentina|Panel of 8 gas Argentinean<br>distribution companies<br>1970-1995|NERA (1997)|TFP|Estimate that using customers are proxy for output,<br>annual X to be used in tariff revision should be around<br>2.4%.|
|Argentina|Panel of 8 gas Argentinean<br>distribution companies<br>1993-1997|Rossi (2001)|SPF|Major catching up and frontier shift during the period<br>for all operators.|
|Brazil|Cross-section of 24 distribution<br>operators<br>1997/1998 data|Resende (2002)|DEA|Argues for relative efficiency scores in the design of a<br>national yardstick competition regulatory regime in<br>Brazil.|

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