Performance based regulation of the electricity supply industry in Hong Kong: An empirical efficiency analysis approach

This paper presents an empirical efficiency analysis approach to analyze the efficiency and performance of utilities and its effects on prices under the price-cap performance based regulation (PBR) model. A data envelopment analysis (DEA)-like frontier-based method is used to compute the total factor productivity with the Malmquist productivity index. Results of case studies support the use of the approach to account for the relation of the X-factor and the PBR model on the two power utilities in Hong Kong's electricity supply industry.