Perfomance and Efficiency in Colombia's Power Distribution Sistem: Effects of the 1994 Reform

Abstract

We asess evolution in perfomance, efficiency and productivity of Colombia`s power distribution utilitiesbefore and after the 1994 regulatory reform that introduced electricity market activities for the power sector in 12 distribution companies from 1985 to 2001. Perfomance is evaluated contrasting changes in meanand median by Wilcoxon Rank Sum and Pearson test on financial and other perfomance indicators. Technical efficiency is measured by means of Data Envelopment Analysis (DEA). The nature of the dataset allows the the estimation of Malmquist productivity index and its evolution in time. Results show a recovery after thereform in the mains perfomance indicators of profitability, parcial input productivity, and output. Plantefficiency and productivity increased after de reform, mainly in the largest utilities used as benchmarks inthe DEA efficiency scores measures. Meanwhile, the less efficient power distribution companies did not improve after the reform and were not able to undertake plant restructuring to chatch up in plant efficiency with respectto the Pareto efficient input allocation. Econometric results on DEA efficiency scores suggest a positive effectof policy reform.