Approach on performance evaluation and index selection for electricity distribution utilities

Establishing an effective performance evaluation method and market driven incentive mechanism is an important subject that the electric power utilities are currently facing with. By aid of Data Envelopment Analysis (DEA) method which is widely used in other industries´ performance evaluation, three DEA based models are proposed to evaluate electricity distribution utilities´ performances, the relative efficiency scores are then given. In addition, the improvement schemes are presented for those relative less efficient utilities. At last, an approach of sensitivity analysis with respect to evaluation indices and a method to simplify evaluation indices are presented. The empirical study shows that the proposed performance evaluation method for electricity distribution utilities is effective and straightforward.