Performance evaluation and improvement directions for an Indian electric utility

This study evaluates the performance of 29 Electricity Distribution Divisions (EDDs) of an Indian state – Uttarakhand – deploying Input oriented Data Envelopment Analysis (DEA). The results indicate that the performance of several EDDs is sub-optimal, suggesting the potential for cost reductions and possible reduction in employees number. In the DEA method more than one unit are identified as efficient. Therefore, this study suggests a method for ranking the efficient units by their importance as benchmarks for the inefficient units through benchmark share measure. The bigger the benchmark share, the more important an efficient division is in benchmarking for inefficient ones. Result reveals that plain area divisions are relatively efficient and have higher potential to influence the performance of inefficient EDDs. This study is envisaged to be instrumental to policy makers and managers to increase the operational efficiency of inefficient EDDs and thereby increase the competitiveness in the face of restructuring and liberalization of Indian electricity sector.

► Plain area divisions are more effective in integrating resources than hilly divisions.
► For prevalent inefficiency two models are developed to varying environmental conditions.
► Benchmark share identifies the variable that is influential in increasing the efficiency.
► Savings in terms of reduction in O&M cost and number of Employees.
► Findings of research work redefine the view point of the utility planners.