e3GRID: Was machen wir mit den Ergebnissen des Effizienz-Benchmarkings? (What are we going to do with the results of the efficiency benchmarking?)

13 February 2014
By Tomas Haug and Bastian Gottschling

The European e3GRID benchmarking examined on behalf of 16 national regulatory authorities the efficiency of 21 European electricity TSOs and found considerable inefficiencies. The results of this study, published in July 2013, are currently used in national proceedings. NERA Associate Director Tomas Haug and Principal Bastian Gottschling have advised European TSOs during this process. Their work identifies limitations to the e3GRID benchmarking study and its use in national regulation.

e3GRID, which applies Data Envelopment Analysis (DEA), largely relies on a single DEA-model and likely fails to capture many differences between European TSOs. As a result, it is likely that e3GRID efficiency results also reflect differences across TSOs other than differences in their managerial efficiency. Mr. Haug and Mr. Gottschling conclude that e3GRID is another example which illustrates the limitations to benchmarking in TSO regulation: at best, benchmarking can help to focus regulatory enquiries, but it is not an adequate substitute for detailed evaluation of each regulated TSO’s own costs. Their assessment of the e3GRID benchmarking study was published in the February 2014 edition of Energiewirtschaftliche Tagesfragen, a German journal with ca. 20,000 readers in the German energy market.