Operational expanditure benchmarking of regional distribution units as a tool for efficiency evaluation and desired cost level estimation

Evaluation of activity efficiency of regional power distribution units is nowadays one of the most important management tasks faced by a power distribution company. Regional power distribution units are responsible for performing basic functions of a distribution system operator as well as for correct spending of operational funds for efficient performance of these functions. One of the ways of approaching the above mentioned problem of funds allocation is the application of operational cost benchmarking methods. This approach was recently investigated and reported in numerous studies. Moreover, a regulatory practice for allowable revenue estimation was developed using various benchmarking models of distribution company operational expenditure (OPEX). The above mentioned methodology of operational cost allocation is applied in the presented paper to regional power distribution units of Enea S.A. This company was created in the beginning of 2003 in result of a merging process of 5 smaller companies situated in the north-west of Poland. The biggest company before merging included 10 basic regional distribution units. After consolidation this number increased to 32. The necessity to separate the distribution system operator functions from sales activity (resulting from 2003/54/EC directive) requires unification of the organization structure containing such units. The new structure is facing the budget allocation problem which implies the need for performing the benchmarking study. The aim of such a study is to develop a budget formation support system. It was undertaken by Power Distribution Department of Enea S.A. in cooperation with Computing Science Institute of the Poznań University of Technology.