m.sc. jukka lassila fi session 5 – block 2 barcelona 12-15 may 2003 1 data envelopment analysis in...
TRANSCRIPT
![Page 1: M.Sc. Jukka Lassila FI Session 5 – Block 2 Barcelona 12-15 May 2003 1 DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY DISTRIBUTION COMPANIES](https://reader035.vdocuments.net/reader035/viewer/2022062620/551a8175550346761a8b50ac/html5/thumbnails/1.jpg)
1M.Sc. Jukka Lassila FI Session 5 – Block 2
Barcelona 12-15 May 2003LAPPEENRANTAUNIVERSITY OF TECHNOLOGY
DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY
DISTRIBUTION COMPANIES
M.Sc. Jukka Lassila
M.Sc. Satu Viljainen
M.Sc. Samuli Honkapuro
Prof. Jarmo Partanen
![Page 2: M.Sc. Jukka Lassila FI Session 5 – Block 2 Barcelona 12-15 May 2003 1 DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY DISTRIBUTION COMPANIES](https://reader035.vdocuments.net/reader035/viewer/2022062620/551a8175550346761a8b50ac/html5/thumbnails/2.jpg)
2M.Sc. Jukka Lassila FI Session 5 – Block 2
Barcelona 12-15 May 2003LAPPEENRANTAUNIVERSITY OF TECHNOLOGY
Overview
Overview
Introduction
Evaluation of the present DEA-model
Developments of the present DEA-model
Interruption costs
Conclusions
![Page 3: M.Sc. Jukka Lassila FI Session 5 – Block 2 Barcelona 12-15 May 2003 1 DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY DISTRIBUTION COMPANIES](https://reader035.vdocuments.net/reader035/viewer/2022062620/551a8175550346761a8b50ac/html5/thumbnails/3.jpg)
3M.Sc. Jukka Lassila FI Session 5 – Block 2
Barcelona 12-15 May 2003LAPPEENRANTAUNIVERSITY OF TECHNOLOGY
0
10 000
20 000
30 000
40 000
50 000
Dis tribut ion companies (total num ber is 94)
Ne
twork
le
ng
th [
km
]
Finland – Electricity distribution companies
• The number of electricity distribution companies: ~ 100• Average length of the network: 3 700 km (123…49 000 km)
• Average number of customers: 31 000 (766…314 000)
• 3 years experience of efficiency benchmarking (1999, 2000, 2001)
![Page 4: M.Sc. Jukka Lassila FI Session 5 – Block 2 Barcelona 12-15 May 2003 1 DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY DISTRIBUTION COMPANIES](https://reader035.vdocuments.net/reader035/viewer/2022062620/551a8175550346761a8b50ac/html5/thumbnails/4.jpg)
4M.Sc. Jukka Lassila FI Session 5 – Block 2
Barcelona 12-15 May 2003LAPPEENRANTAUNIVERSITY OF TECHNOLOGY
The factors of the efficiency benchmarking by DEA-model
EFFICIENCYSCORE (0…1)
Operational costs
Power quality
(interruption time) Distributed
energy
Number of customers
Length of the network
![Page 5: M.Sc. Jukka Lassila FI Session 5 – Block 2 Barcelona 12-15 May 2003 1 DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY DISTRIBUTION COMPANIES](https://reader035.vdocuments.net/reader035/viewer/2022062620/551a8175550346761a8b50ac/html5/thumbnails/5.jpg)
5M.Sc. Jukka Lassila FI Session 5 – Block 2
Barcelona 12-15 May 2003LAPPEENRANTAUNIVERSITY OF TECHNOLOGY
The efficiency scores of the Finnish distribution companies
0,00
0,20
0,40
0,60
0,80
1,00
1,20
Distribution companies (total number is 94)
Eff
icie
ncy
scor
e
The average is 0.830
![Page 6: M.Sc. Jukka Lassila FI Session 5 – Block 2 Barcelona 12-15 May 2003 1 DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY DISTRIBUTION COMPANIES](https://reader035.vdocuments.net/reader035/viewer/2022062620/551a8175550346761a8b50ac/html5/thumbnails/6.jpg)
6M.Sc. Jukka Lassila FI Session 5 – Block 2
Barcelona 12-15 May 2003LAPPEENRANTAUNIVERSITY OF TECHNOLOGY
The effects of the efficiency benchmarking (1/2)
1) Directing effects companies tend to pay attention to factors that are used in the DEA-model
2) Efficiency score affect directly to the reasonable return on capital
![Page 7: M.Sc. Jukka Lassila FI Session 5 – Block 2 Barcelona 12-15 May 2003 1 DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY DISTRIBUTION COMPANIES](https://reader035.vdocuments.net/reader035/viewer/2022062620/551a8175550346761a8b50ac/html5/thumbnails/7.jpg)
7M.Sc. Jukka Lassila FI Session 5 – Block 2
Barcelona 12-15 May 2003LAPPEENRANTAUNIVERSITY OF TECHNOLOGY
The effects of the efficiency benchmarking (2/2)
Example:
Operational costs of a company are 200 M€/a.
A) Efficiency score is 1.0
Impact on allowed return = (1.0 - 0.9) * 200 M€ = 20 M€/a
B) Efficiency score is 0.72
Impact on allowed return = (0.72 - 0.9) * 200 M€ = -36 M€/a
![Page 8: M.Sc. Jukka Lassila FI Session 5 – Block 2 Barcelona 12-15 May 2003 1 DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY DISTRIBUTION COMPANIES](https://reader035.vdocuments.net/reader035/viewer/2022062620/551a8175550346761a8b50ac/html5/thumbnails/8.jpg)
8M.Sc. Jukka Lassila FI Session 5 – Block 2
Barcelona 12-15 May 2003LAPPEENRANTAUNIVERSITY OF TECHNOLOGY
Problems of efficiency benchmarking with DEA-model
• The directing effects of benchmarking are not equal for all the companies- There are large numbers of companies for which the
efficiency scores do not depend on power quality
- Power quality affects the efficiency scores randomly
• The changes in the directing effects differ from one year to another
• The present efficiency benchmarking method has to be developed
![Page 9: M.Sc. Jukka Lassila FI Session 5 – Block 2 Barcelona 12-15 May 2003 1 DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY DISTRIBUTION COMPANIES](https://reader035.vdocuments.net/reader035/viewer/2022062620/551a8175550346761a8b50ac/html5/thumbnails/9.jpg)
9M.Sc. Jukka Lassila FI Session 5 – Block 2
Barcelona 12-15 May 2003LAPPEENRANTAUNIVERSITY OF TECHNOLOGY
Problems of efficiency benchmarking with DEA-model
0
10
20
30
40
50
60
Operationalcosts
Power quality * Distributedenergy
Network length Customers
Dis
trib
utio
n c
om
pa
nie
s0
100
200
300
400
500
600
Pri
ce o
f ou
tage
[€/
cust
omer
,h]
Price of outage [€/customer,h]
The number of companies that have insignificant factors in the DEA-model
![Page 10: M.Sc. Jukka Lassila FI Session 5 – Block 2 Barcelona 12-15 May 2003 1 DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY DISTRIBUTION COMPANIES](https://reader035.vdocuments.net/reader035/viewer/2022062620/551a8175550346761a8b50ac/html5/thumbnails/10.jpg)
10M.Sc. Jukka Lassila FI Session 5 – Block 2
Barcelona 12-15 May 2003LAPPEENRANTAUNIVERSITY OF TECHNOLOGY
Developing the DEA-model (1/2)
costs lOperationa
c timeonInterruptiCustomersNetworkEnergy hMax
1
23210
v
vuuu
costs) onInterrupticosts lOperationa(
cCustomersNetworkEnergy hMax
1
3210
v
uuu
![Page 11: M.Sc. Jukka Lassila FI Session 5 – Block 2 Barcelona 12-15 May 2003 1 DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY DISTRIBUTION COMPANIES](https://reader035.vdocuments.net/reader035/viewer/2022062620/551a8175550346761a8b50ac/html5/thumbnails/11.jpg)
11M.Sc. Jukka Lassila FI Session 5 – Block 2
Barcelona 12-15 May 2003LAPPEENRANTAUNIVERSITY OF TECHNOLOGY
Developing the DEA-model (2/2)
• Principle changes in the model- power quality can be measured as a interruption costs
- power quality is not a separate factor in the model
- interruption costs are added to operational costs
Power quality becomes meaningful and almost equally important factor for each company
![Page 12: M.Sc. Jukka Lassila FI Session 5 – Block 2 Barcelona 12-15 May 2003 1 DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY DISTRIBUTION COMPANIES](https://reader035.vdocuments.net/reader035/viewer/2022062620/551a8175550346761a8b50ac/html5/thumbnails/12.jpg)
12M.Sc. Jukka Lassila FI Session 5 – Block 2
Barcelona 12-15 May 2003LAPPEENRANTAUNIVERSITY OF TECHNOLOGY
Number of companies having insignificant factors in efficiency benchmarking
0
10
20
30
40
50
60
Operational costs Power quality * Distributed energy Network length Customers
Dis
trib
utio
n c
ompa
nies
Present DEA-modelDeveloped DEA-model
![Page 13: M.Sc. Jukka Lassila FI Session 5 – Block 2 Barcelona 12-15 May 2003 1 DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY DISTRIBUTION COMPANIES](https://reader035.vdocuments.net/reader035/viewer/2022062620/551a8175550346761a8b50ac/html5/thumbnails/13.jpg)
13M.Sc. Jukka Lassila FI Session 5 – Block 2
Barcelona 12-15 May 2003LAPPEENRANTAUNIVERSITY OF TECHNOLOGY
Price of outages in developed DEA-model
0
2
4
6
8
10
12
14
Distribution companies (total number is 94)
Price o
f outa
ge [
€/c
usto
mer,
h]
• For most companies price of outages is between 4…6 €/customer,h
• Corresponding prices of outages in the present DEA-model are 0…500 €/customer,h
![Page 14: M.Sc. Jukka Lassila FI Session 5 – Block 2 Barcelona 12-15 May 2003 1 DATA ENVELOPMENT ANALYSIS IN THE BENCHMARKING OF ELECTRICITY DISTRIBUTION COMPANIES](https://reader035.vdocuments.net/reader035/viewer/2022062620/551a8175550346761a8b50ac/html5/thumbnails/14.jpg)
14M.Sc. Jukka Lassila FI Session 5 – Block 2
Barcelona 12-15 May 2003LAPPEENRANTAUNIVERSITY OF TECHNOLOGY
Conclusions
• The directing effects of benchmarking have to be predictable and equal for each company
• This presentation introduced a solution to a problem concerning equality - basic idea was change the way in which power quality is handled in the DEA-model
• Future research activities include improving the predictability and taking investment into account in the efficiency benchmarking