Benchmarking and Incentive Regulation of Quality of Service: An Application to the UK Electricity Distribution Networks

Dimitrios Giannakis, Tooraj Jamasb*, Michael Pollitt

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review


Quality of service has emerged as an important issue in post-reform regulation of electricity distribution networks. Regulators have employed partial incentive schemes to promote cost saving, investment efficiency, and service quality. This paper presents a quality-incorporated benchmarking study of the electricity distribution utilities in the UK between 1991/92 and 1998/99. We calculate technical efficiency of the utilities using Data Envelopment Analysis technique and productivity change over time using quality-incorporated Malmquist indices. We find that cost-efficient firms do not necessarily exhibit high service quality and that efficiency scores of cost-only models do not show high correlation with those of quality-based models. The results also show that improvements in service quality have made a significant contribution to the sector’s total productivity change. In addition, we show that integrating quality of service in regulatory benchmarking is preferable to cost-only approaches.
Original languageEnglish
JournalEnergy Policy
Issue number17
Pages (from-to)2256-2271
Number of pages16
Publication statusPublished - 2005
Externally publishedYes


  • Quality of service
  • Benchmarking
  • Incentive regulation

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