Evaluate the Efficiency of Iranian Electric Power Distribution Companies by Stochastic Nonparametric Envelopment of Data (StoNED) Approach Print

Using more accurate approaches to evaluate the efficiency of the Iranian electricity distribution companies will help to planner to identify the best practice companies among others and enhance the quality of customer services. Usually, the data envelopment analysis (DEA) and stochastic frontier analysis (SFA) were used to assess the efficiency of decision making units. Besides the advantages of each of these methods, they have some drawbacks such as lack of proper severability or the need to shape of the production function. In this paper, stochastic nonparametric envelopment of data (StoNED) approach which combines with the two mentioned methods and has the advantages of both, are proposed to evaluate the efficiency of 39 Iranian electricity distribution companies. We defined proper input and output variables for evaluating the efficiency of each case. The proportion of underground cables in the total length of the network is taken into account as a contextual variable which is the proposed method considers a variable to better control for the heterogeneity of the firms and their operating environments. The Iranian firms based of the DEA and StoNED are evaluated and ranked. The results show, the ranking by StoNED are more reliable than the DEA. Isfahan and Kermanshah companies have the highest rank and are benchmark for others.