China's Power Industry Efficiency Analysis Based On Stochastic Frontier Analysis

As the most widely-used final energy,electricity has profound significance on modernization,urbanization and intellectualization in society development process.In order to provide stable electricity supply,China's government has conducted a series of electricity reforms and issued some incentive policies.The electricity reforms has gone through over 20 years since 1980 s and power industry has presented different characteristics in different stages.At present,China has achieved 100% electrified rate,which means that power shortage problems has basically been solved.The electricity demand in some areas is insufficient and is even lower than electricity supply capacity.The efficiency analysis on power industry is not only helpful to evaluate the operation status of power companies,but also beneficial to test the effects of some electricity reforms on efficiency improvements,which could provide policy basis for regulation departments.In this paper,efficiency analysis is divided into two parts: the power generation part and the power grid part.As the main subsectors in power industry,they have different primary business,so we treat them separately.As for the generation department,this paper takes thermal power listed companies as the representative sample and try to explore the latent relationship between firm size and technical efficiency.Some policy discussion are also included,such as coal-electricity pricing linkage and developing large units and suppressing small ones.In this part,we choose 17 typical power generation firms,in which thermal power is its main business.And we use power products revenue as the proxy variable and employ stochastic frontier autoregressive model to obtain efficiency scores.We also analyze this relationship from both the static and dynamic aspects.The grid industry has different characteristics from generation industry.Firstly,differing from the production nature of generation department,the transmission and distribution of power grid are closely related to a kind of public service.In addition,in order to satisfy consumers electricity demand,the construction,operation and maintenance costs because of grid extension is more susceptible to external factors compared with the generation plants.Because of huge costs of electricity interruption,service quality became an important operation goal in grid companies.So in this part,besides the technical efficiency analysis,we also focus on service efficiency and environmental variables,which aims to explore the effects of service quality and contextual factors on the efficiency.In this part,we mainly adopt contrastive analysis and marginal analysis,and then construct combinatory analysis among several models,two kinds of inputs and several environmental variables to obtain common conclusions.The results show that in China,when the firm size of thermal power listed companies is bigger,its technical efficiency is higher,which means that thermal power plants has eliminated inefficient capacities after policy regulation,developing large units and suppressing small ones policy has achieved its goal of promoting efficiency improvements of thermal plants.Separation of power grids from plants in 2002 has achieved its goals in discriminating grid companies.Compared with north regions,the reform has more significant effects in south regions and promote efficiency improvements of several south grid companies.Comparison between results of two model types indicates that monetary-oriented input models can derive more empirical results.From both statistical significance and change trends,service efficiency is different from technical efficiency,which means the problems of measuring technical efficiency in the past and future grid construction and efficiency evaluation should pay attention to service quality.The inputs type,efficiency type and the environmental variables type are closely related.