Efficiency evaluation of electricity distribution utilities in India: A two-stage DEA with bootstrap estimation

The efficiency of the energy sector in India, the world's third-largest energy consumer, is becoming an important issue amid growing concerns about global warming. This paper examines the efficiency of electricity distribution utilities in India using panel data from 2005 to 2012. We perform a two-stage data envelopment analysis with a bootstrap estimation, in which bias-corrected efficiency estimates are calculated in the first stage and then regressed on external environmental variables in the second stage. First, we find positive effects of customer structure and population density on the efficiency of utilities. Second, we find efficiency advantages of public utilities in the Indian power distribution sector. However, the interaction between ownership and population density is negative, implying that public utilities are less efficient than private enterprises in high population density areas. Finally, we find that government subsidies are negatively related to the efficiency of utilities.