2010 Divestiture policy and operating efficiency in U.S. electric power distribution文献.pdfVIP

J Regul Econ (2010) 38:86–109 DOI 10.1007/s11149-010-9122-3 ORIGINAL ARTICLE Divestiture policy and operating efficiency in U.S. electric power distribution John Kwoka · Michael Pollitt · Sanem Sergici Published online: 25 June 2010 © Springer Science+Business Media, LLC 2010 Abstract Divestiture of generation assets by vertically integrated electric utilities has been a key element of restructuring in the U.S. The resulting generation sector has received much attention, but the standalone distribution sector that has been simulta- neously created has received very little. This paper addresses the effects of divestiture policy on the operating efficiency of the resulting distribution utilities. Using data envelopment analysis to measure operating efficiency, we examine 73 utilities in the period 1994–2003 and find that the major divestitures that were required by state reg- ulators had large adverse effects on efficiency, whereas utilities that divested at their own initiative had at worst neutral efficiency outcomes. These results raise serious questions about one of the centerpieces of electricity restructuring. Keywords Electricity reform · Divestiture · Vertical integration JEL Classification L94 · L98 · L22 1 Introduction Over the past 15 years a vast restructuring of the electric power sectors in the U.S. and many other countries has taken place. In the U.S. one of the key components of restructuring has been divestiture: vertical divestiture of generation assets from J. Kwoka ( ) B Northeastern University, Boston, MA, USA e-mail: j.kwoka@neu.edu M. Pollitt University of Cambridge, Cambridge, UK S. Sergici The Brattle Group, Cambridge, MA, USA 123 Divestiture policy and operating efficiency 87 distribution and transmission companies, the divestiture of control (but not owner- ship) of transmission assets to independent