Shafali Jain et al.
/ (IJAEST) INTERNATIONAL JOURNAL OF ADVANCED ENGINEERING SCIENCES AND TECHNOLOGIES
A Parametric and Non-Parametric Approach for Performance
Appraisal of Indian Power Generating Companies
Shafali Jain, Tripta Thakur,
Research scholar, Electrical Associate Professor, Electrical
Department, MANIT-Bhopal, Department, MANIT-Bhopal,
India-462003 India-462003
shafalijain9@yahoo.co.in, tripta_thakur@yahoo.co.in,
Abstract— This work aims at evaluating the productivity and
efficiency analysis of Indian electricity generation companies
(GENCOs) for the time period 2002-03 to 2007-08.The
performance analysis or benchmarking of generation companies
is evaluated using two methodologies- a non-parametric
approach to frontier analysis commonly known as Data
ES
Envelopment Analysis (DEA) and a parametric approach known
as Stochastic Frontier Analysis (SFA) using panel data of six
years. Both methodology evaluates and uses total factor
productivity (TFP) change as a benchmarking gauge. The total
TFP change is decomposed into technical change and efficiency
change and the efficiency analysis is investigated taking scale
effect into account so as to separate pure technical efficiency and
scale efficiency. In addition, the SFA allows analyzing the effect
of restructuring in Indian electric power sector. This work in the
field of generation sector of power will identify whether the
companies/utilities are efficient or not, create benchmark for
inefficient utilities by identifying their shortcomings and set the
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targets. This benchmarking will pressurize the generation
companies to provide better services to customers. Such an
analysis would offer valuable lessons to ensure that the new
structure being adopted is better than the regulatory and
legislative framework designed a few decades back. Efficiency
measurement can form the core for introduction of the incentive
based regulatory regimes and in promoting yardstick
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competition amongst a number of utilities.
Index Terms— Benchmarking, Generation companies,
Restructuring, Return to scale, Scale efficiency, Technical
efficiency, Total factor productivity change.
I. INTRODUCTION
The electric power industry which had been maintained as a
vertically integrated system in the past, the restructuring of
electric power industry in many countries in the world has
been performed in the way so as to raise efficiency by
introducing competition [1]. The restructuring of electric
power industry in India kept pace with the worldwide trend
and started with the purpose of decreasing the electricity price
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Vol No. 1, Issue No. 2, 064 - 078
Arun Shandilya,
Professor, Electrical Department,
MANIT-Bhopal
India-462003
arunshandilya@yahoo.com
T
and to bridge the demand-supply gap through the introduction
of competition and improvement of efficiency, but did not
proceed as it planned. At this stage it is essential to have
documentation of the effects of such reforms. Such
documentation has been done in developed countries,
however from a few case studies: the experience of
developing countries remains much less researched. This
documentation can be made by performance evaluation for the
structural change in electric power industry. We will be able
to find out the direction of the structural change in electric
power industry in India by analyzing the efficiency level of
power generation companies in India. Such a review of
performance of existing utilities is a need for the success of
any reform program. Based on efficiency analysis,
benchmarks can be set, and targets for improvement may be
identified. The efficiency evaluation is also necessary for
generating competition and for sector regulation.
Efficiency measurement can form the core for introduction
of the incentive based regulatory regimes and in promoting
yardstick competition amongst a number of utilities. Since the
country has not reached a mature stage in the development of
electricity infrastructure unlike the case of developed
countries, there is a very good opportunity to learn from
mistakes and adopt a suitable model for the country. Internal
efficiency improvements are always win-win options for the
existing utilities as benchmarking the operational and financial
aspects can free up resources, which can bring down the
overall resource requirement for utilities [4]. All of this would
however, require application of formal benchmarking
techniques to evaluate performance at regular intervals.
Benchmarking is the practice of comparing indicators of
performance. Benchmarking has proven to be powerful way in
pressurizing utilities to provide better services to customers.
The performance evaluation can be through by a number of
approaches. Among many possible efficiency measurement
methods, Data Envelopment Analysis (DEA) and Stochastic
Frontier analysis (SFA) are most widely used for
benchmarking. DEA has been used especially for the
complicated systems with lots of inputs and outputs since its
introduction by Charnes, Cooper and Rhodes in 1978 based
on previous work by Farrell on production efficiency. This
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paper presents a case study which provides productivity and
efficiency analysis of generation utilities for the period 2003
to 2008, so that they can rank themselves, identify their
shortcomings, set targets and tries to achieve those targets.
II. METHODOLOGY
1) DEA
In DEA, the data are enveloped by a piecewise linear frontier
in such a way that radial distances to the frontier are
minimized. The basic model of DEA, the CCR model, was
proposed by Charnes, Cooper and Rhodes (1978). The CCR
model was formulated as a linear programming (LP) problem
concerned with, say, n decision making units (DMUs), electric
utilities in the present analysis, which use varying quantities
and combination of inputs Xi (i=1,…s) to produce varying
quantities and combinations of outputs Yj (j=1,…m).The most
common form of measurement of efficiency in case of a single
output and single input framework is the ratio output/input [8].
In case of multiple outputs and inputs, it is a weighted
combination of outputs to weighted combination of inputs,
known as virtual outputs and virtual inputs, where the weights
are derived from data instead of being fixed in advance.
weights (ur) as variables:
max    r ur yro 
o
 i vi xio 
ES
Efficiency of each DMU is measured and hence n
optimization exercises are carried out. The following problem
is solved to obtain the values of input weights (vi) and output
u1 y1 j  ................us ysj
s.t. 1
v1 x1 j  ................vm xmj
(1)
where j=1,…,n
v1, v2,…. vm ≥0,
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u1, u2,…. us ≥0,
The constraints imply that the ratio of ―virtualoutput‖ to
―virtualinput‖ should not exceed 1 for every DMU. The
objective is to obtain weights vi and ur that maximize the ratio
for DMUo. The optimal objective value θ* is at most 1.
However, multiple solutions might exist for the above
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problem. Hence it is transformed into a linear programming
problem using transformation developed by Charnes and
Cooper. To allow for variable returns to scale Banker,
Charnes and Cooper (1984) added the convexity constraint to
the optimization problem and proposed variable return model
(BCC).
2) SFA
The stochastic Frontier approach (SFA) specifies a functional
form of the cost, profit or production relationship among
inputs, outputs, and environmental factors and allow for
random error. Hence it is also called parametric approach. It
gives composite error model decomposed into two terms, a
symmetric component representing statistical noise and an
asymmetric one representing inefficiency.
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Vol No. 1, Issue No. 2, 064 - 078
A stochastic production function defined by Battese and
Coelli (1995)
In yit   f xit ,t ,    vit  uit
(2)
Where yit is the output of the i-th firm in the t-th year;
xit denotes a (1×K) vector of inputs;
f . is a functional form;
t is a time trend representing technical change;
 is a vector of unknown parameters to be estimated;
the vit s are random errors, to be independent and identically
distributed (i.i.d) with mean zero and variance  v2 ,
independent of the uits;
the uit s are the technical inefficiency effects which are
assumed to be defined by
uit  exp  t  T ui ,
T
i =1,2,……N; t=1,2,……T and η is scalar parameter which
accounts for time-varying effects.
The technical efficiency measure are obtained as
 uit 
TEit  E  exp
 eit 
(3)
where eit = vit - uit is the total error term which can be used to
calculate the efficiency change component.
3) Malmquist Productivity Index (MPI)
The DEA and SFA techniques can be used to calculate
Malmquist Index of productivity change over time, assuming
the underlying technology is constant returns to scale (CRS)
(Coelli et al., 1998). The Malmquist total factor productivity
(TFP) index measures the TFP change between two data
points by calculating the ratio of the distances of each point
relative to a common technology. The distance function in
terms of the above analysis can be defined as
{Dt(xt,yt)}-1 = θt
2.1 SFA Model Specification
The translogarithmic and the cobb-douglas production
functions are the two most common functional forms, which
have been used, in empirical studies on production, including
frontier analysis [13] The cobb-douglas and translog
production function models are defined in equations (4) and
(5)
ln(Yit )  0  1 ln( X1it )   2 ln( X 2it )  t t vit uit (4)
ln(Yit )   0  1 ln( X 1it )   2 ln( X 2it )  11[ln( X 1it )]2 
 22[ln( X 2it )]2  12[ln( X 1it ) ln( X 2it )]  1t ln( X 1it )t  (5)
 2it ln( X 2it )t   t t   tt t 2 v it uit
The above model does not include the environmental
variables. As pointed out by Coelli, Perelman and Romano
(1999), measuring net efficiency is an important matter as it
allows one to predict how companies would be ranked if they
were able to work in equaling environments. Therefore, the
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most general function to be estimated including six additional
environmental variables.
After including environmental variables, the model becomes
ln(Yit )   0  1 ln( X 1it )   2 ln( X 2it )   t t  1 ln( Z1it ) 
 2 ln( Z 2it )   3 ln( Z 3it )   4 ( REGULATION) 
 5 ( FUELTYPE )  vit  uit
ln(Yit )   0  1 ln( X 1it )   2 ln( X 2it )  11[ln( X 1it )]2 
 22[ln( X 2it )]2  12[ln( X 1it ) ln( X 2it )]  1t ln( X 1it )t 
 2it ln( X 2it )t   t t   tt t 2  1 ln( Z1it )   2 ln( Z 2it ) 
 3 ln( Z 3it )   4 ( REGULATION )   5 ( FUELTYPE ) v it uit
(8)
Where ln = logarithm
Yit = units generated by the power station (GWh)
X 1it = installed capacity (MW)
X 2it = coal consumption (MT)
Z1it = plant load factor (%)
Z 2it = Energy losses (GWh)
Z 3it = Per capita consumption (GWh)
T = time trend
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 i and  i are unknown parameters to be estimated.
The two dummies are included in the
namely, REGULATION and FUELTYPE .
REGULATION  1, if utility is unbundled, otherwise 0;
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FUELTYPE  1, if GENCO uses coal as primary fuel,
otherwise 0;
2.2 Hypothesis testing
As suggested by Coelli (1996), the alternative models would
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be estimated and the preferred model would be selected using
Likelihood Ratio (LR) test. The generalized likelihood ratio
test was conducted on certain hypotheses relating to the
estimated parameters such as: (1) The production function is
specified by a Cobb-Douglas functional form (that is, H0: βjk
=0); (2) There is absence of inefficiency effects that is there is
stochastic effects in the production (H0: γ = 0); (3) The half
normal model is adequate representation of the data (H0: µ =
0); (4) Technically inefficiency effects are absent from the
production function model i.e. model is equivalent to the
average response function (Full Frontier Model), which can be
efficiently estimated by ordinary least square (OLS)
regression (H0: γ = δ0=δ1= δ2= δ3= δ4= δ5= δ6= 0); (5) Panel
data is not applicable to the model (H0: η = 0).
The final hypothesis although not tested with generalized
likelihood ratio test but based on the assumption, that the
selected Cobb-Douglas functional form is characterized by
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Vol No. 1, Issue No. 2, 064 - 078
constant return to scale and fixed elasticity of output with
respect to production inputs. The generalized likelihood ratio
test, which is defined by the test statistic, chi-square (χ2) is
defined as:
χ2=-2[L(H0)–L(Ha)]
(7) (9)
The χ2 has a mixed chi-square distribution with the degree of
freedom equal to the number of parameters excluded in the
restricted model; L (H0) is the log – likelihood value of the
restricted model. While L (Ha) is the Log- likelihood value of
the un-restricted model. Maximum likelihood estimation
procedure is used to estimate the parameters of the stochastic
frontier equation 1. The parameters to be estimated include β
and variance parameters such as σ2 = σu2 + σv2 and γ = σu2 /σ2.
Where σ2 is the sum of the error variance, while γ measures
T
the total variation of output from the frontier attributed to the
existence of random noise or inefficiency as γ is bounded
between zero and one, where if γ = 0, inefficiency is not
present, hence deviation from the frontier is entirely due to
random noise and if γ = 1, indicates that the deviation is due
entirely to inefficiency (Battese & Coelli, 1995). The
FRONTIER 4.1 version (Coelli, 1996) was used to obtain the
maximum likelihood estimates (MLE) for the study.
2.3 Input-output selection and data source
There can be a number of input/output variables for evaluating
the efficiency of electric utilities. The most important job in
this efficiency analysis is the right selection of inputs and
model outputs. No universally applicable rational template is
available for selection of variables. In the context of efficiency
measurement, the inputs must reflect the resources used and
the outputs chosen must represent the activity levels of the
utilities. A study of standard literature reveals significant
insights into the choice of variables. The most widely used
variables based on international experience have been outlined
in the literature. Input variables chosen has been shown in
table I. DEA and SFA were used to derive the benchmarks
based on the comparison of the 30 generation companies
(GENCOs) in which 8 entities were the SEBs, 7 entities
comprised various electricity departments (EDs), and 15
entities comprised the unbundled state-owned electric utilities
(SOEUs). The physical data for various states were obtained
for the different years from ―Gen eral Review‖ published by
Central Electricity Authority (CEA) [10].
3.1 DEA based MPI
Following Fare et al. (1994), the Malmquist input oriented
TFP change index between period s and period t is given by:
1/ 2
dit  yt , xt   dis  yt , xt  dis  ys , xs 
mi ( ys , xs , yt , xt )    
dis  yt , xt   dit  yt , xt  dit  ys , xs  
where the first ratio on the right hand side measured change in
efficiency between periods s and t. The remaining part of the
index in the equation measures technical change, so that
tfpch = effch × techch
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d it  yt , xt   d s  y , x  d s  y , x 
1/ 2
effch  techch   it t t  it s s 
d is  yt , xt   d i  yt , xt  d i  ys , xs  

TABLE I

PERFORMANCE PARAMETERS

DEA model SFA model

Inputs Output Inputs Output
Installed capacity (MW) Units generated (GWh) Installed capacity (MW) Units generated (GWh)

Coal consumption (MT) Coal consumption (MT) Environmental variables

Plant load factor (%)
System losses (GWh)
Per capita consumption

T
(GWh)
Dummy Regulation
Dummy Fuel type

where, tfpch signifies change in total productivity, which is

ES
caused by the joint influence of effch, i.e. the change in
efficiency from period s to t and techch, the geometric mean
of the shift in technology between the two periods, evaluated
at xt and also at xs. The value of the indices greater than one
signifies increase in productivity.
2.3.2 SFA based MPI
Efficiency change between two adjacent period s and t for the
ith firm /utility can be obtained as effch= TEit/TEis and technical
change index between period s and t for the ith firm can be
calculated directly from the estimated parameters.
A
 f xis , s,    f xit ,t ,   
1/ 2
exhibited decreasing returns to scale suggesting that the
utilities exceeded their most productive scale size. This
outcome supports the unbundling policy of the GoI, as
envisaged in the Electricity Act. The management of the
utilities, in general, does not have control over their scale of
operation. Therefore, it is quite appropriate to assess
efficiency relative to the VRS frontier. So, the technical
efficiency of utilities is measured against the VRS frontier.
To explore the scale effects, the BCC formulation that
assumes a VRS by taking into consideration the sizes of
utilities was employed. This formulation ensures that similar
sized utilities are benchmarked and compared with each other.
The average technical efficiency is 0.772. The results indicate

techch  1   1   the possibility of restructuring of several utilities that display
 s   t 
low scale efficiencies (Table III). The low value of scale
efficiencies and the fact that these utilities exhibit decreasing
returns to scale indicate that these have considerable scope for
improvements in their efficiencies by resizing (downsizing)
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III. ANALYSIS OF THE RESULTS
1) DEA results
CCR model measures the overall efficiency which is the
efficiency measured against the CRS frontier. The results are
presented in Table III. It is evident from Table II that Indian
GENCOs display significant variations in efficiency levels.
The total efficiency had a mean score of 0.6 for all the
utilities and almost half of the utilities lie below this average
value. Only two utilities turned out to be the best practices and
the remaining 28 utilities exhibited varying degree of
inefficiencies. It is also observed that all the companies, with
the exception of the best practices and one utility (Nagaland),
their scales of operations to the optimal scale defined by more
productive utilities in the sample.
2) SFA Results
2.1 Hypotheses test results
The results of the likelihood ratio tests are presented in Table
III The first hypothesis is conducted to find whether the Cobb
Douglas is the right functional form. The first hypothesis that
the Cobb-Douglas functional form was the best-fit functional
form for the data was accepted. The second hypothesis that
there was absence of inefficiency effects in the production

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 Shafali Jain et al. / (IJAEST) INTERNATIONAL JOURNAL OF ADVANCED ENGINEERING SCIENCES AND TECHNOLOGIES
Vol No. 1, Issue No. 2, 064 - 078

TABLE II

RESULTS OF DEA MODEL

Technical
Total Efficiency Scale Returns to
S.No Utility Efficiency Benchmarks
(CRS) Efficiency (SE) Scale (RTS)
(VRS)

1 Haryana 0.569 0.802 0.709 DRS 16 9 8

2 Himachal Pradesh 0.97 0.97 1 - 16 18

3 Jammu & Kashmir 0.588 0.588 1 - 18 16

16 9 8

T
4 Punjab 0.668 0.978 0.683 DRS

5 Rajasthan 0.701 0.981 0.714 DRS 9 18

6 Uttar Pradesh 0.552 0.773 0.714 DRS 9 18

7 Uttrakhand 0.787 0.787 1 - 16 18

8 Delhi 0.703 1 0.703 DRS 8

10

11

12
Gujarat

Madhya Pradesh

Chhattisgarh

Maharashtra
0.713

0.532

0.51

0.616
ES 1

0.745

0.713

1
0.713

0.714

0.715

0.616
DRS

DRS

DRS

DRS
9

9 18

9 18

12

13 Goa 0.971 0.971 1 - 16 18

14 Andhra Pradesh 0.566 0.97 0.584 DRS 9 15 12

15 Karnataka 0.53 1 0.53 DRS 15

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16 Kerala 1 1 1 - 16

17 Tamil Nadu 0.503 0.962 0.523 DRS 15 12

18 Puducherry 1 1 1 - 18

19 Bihar 0.067 0.124 0.543 DRS 16 8 18

20 Jharkhand 0.361 0.516 0.698 DRS 16 9 8

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21 Orissa 0.548 0.929 0.59 DRS 8 16 9

22 West Bengal 0.517 0.724 0.714 DRS 9 18

23 Sikkim 0.449 0.449 1 - 16 18

24 Assam 0.86 0.86 1 - 18 16

25 Manipur 0.063 0.063 1 - 16 18

26 Meghalaya 0.741 0.741 1 - 16 18

27 Nagaland 0.409 1 0.409 IRS 27

28 Tripura 0.934 0.934 1 - 16 18

29 Arunachal Pradesh 0.438 0.438 1 - 16 18

30 Mizoram 0.158 0.158 1 - 18 16

Mean 0.6 0.772 0.795

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 Shafali Jain et al. / (IJAEST) INTERNATIONAL JOURNAL OF ADVANCED ENGINEERING SCIENCES AND TECHNOLOGIES
TABLE III
HYPOTHESES TEST RESULTS
Null Hypotheses χ2-critical value
H0: βjk =0 12.59
H0: γ = 0 5.138
H0: µ = 0 7.045
H0: γ = δ0=δ1= δ2= δ3= 0 1.37
H0: η = 0 3.84
process was rejected, while the third hypothesis that the half
normal representation is correct distributional form for the
data is also rejected. The fourth hypothesis that the
inefficiency effects are absent from the production function
model i.e. model is equivalent to the average response
function (Full frontier model), which can be efficiently
estimated by ordinary least square (OLS) regression is also
rejected for the model. The last hypotheses that the panel data
ES
is not applicable for the model is also rejected that means the
panel data can be applied to the model.
3.2 Parameter estimation and interpretation
The estimates of the stochastic frontier production function for
cobb-douglas (CD) and translog (TR) form are presented in
Table IV. The estimated coefficients of the explanatory
variables showed that installed capacity and coal consumption
had positive effect on the change in output. This means an
increase in the installed capacity and coal consumption
A
increases plant output and vice-versa. Both coefficients are
significant at 1% level and 5% of significance respectively for
the accepted cobb-douglas form. The negative variables of the
inefficient function mean positive impact on technical
efficiency, and vice-versa. All environmental factors are
significant except dummy regulation. The energy losses has
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unexpected negative sign, so here we can conclude that in this
particular analysis the inefficiency cannot be reduced by
reducing the energy losses. The output elasticities are shown
in Table VII. It is clear that the production elasticity is
dominated by the capital or installed capacity elasticity.
3.3 Comparative efficiency and productivity analysis
The yearly DEA efficiencies for CRS and VRS, and SFA
efficiencies for both CD and TR models are shown in table V.
The average efficiencies are also shown for the GENCOs in
table. It is quite clear that DEA VRS > SFA TR > SFA CD >
DEA CRS. Gujarat generating company is having the highest
average efficiency over the period of six years with CRS,
VRS, SFA CD and SFA TR of 0.667, 1, 0.953 and 0.956
respectively. The mean CRS, VRS, SFA CD and SFA TR
efficiencies are 0.541, 0.730, 0.627 and 0.647 as seen from
Table VI. Table VIII shows TFP changes for the generating
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Vol No. 1, Issue No. 2, 064 - 078
χ2-calculated value Decision
11.58 H0: Accepted
204.4 H0: Rejected
213.64 H0: Rejected
-366.16 H0: Rejected
547.8 H0: Rejected
companies. Nagaland is having the highest SFA based TFP
change and Manipur is having the highest DEA based TFP
T
change, though these companies are technically as well as
scale inefficient companies. The comparative analysis of
average efficiencies is shown in fig 1 and the comparative
productivity results are shown in fig 2. There are differences
between the SFA and DEA results. In case of DEA results of
productivity, 21utilities are having TFP change value greater
than 1 that means showing technical progress. While in SFA-
CD form, 22 (almost same) utilities have TFP change greater
than 1. SFA translog form shows that almost all the generation
companies are having TFP change of value greater than 1.
IV CONCLUSIONS
From the comparison of SFA and DEA model, the average
CRS TE, VRS TE and SFA TE efficiency scores are 0.541,
0.73 and 0.627 respectively. We can conclude that VRS TE >
SFA TE> CRS TE. Himachal Pradesh is having the highest
average CRS efficiency score of 0.862 and Gujarat is having
the highest SFA efficiency score of 0.953 and Mizoram is
having least CRS and SFA efficiency score. For the SFA
model, the production elasticities are dominated by installed
capacity elasticity which is equal to 0.817 while the fuel
elasticity is 0.1144. The RTS value is 0.9314 indicating that
the utilities are exhibiting decreasing returns to scale (DRS).
This supports unbundling policy of government of India. The
γ parameter is 0.998 that means 99.8 % deviations are due to
inefficiency effects and 0.2 % is noise effects.
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Opeartional Inefficiencies in Power Generating Units: A Case Study of
Indian Power Plants.‖ IEEE Transactions on Power Systems, Vol. 14,
no. 2, May 1999.
[8] B. Golany, Y. Roll, and D. Rybak,‖Measuring Efiiciency of Power
Plants in Israel by Data Envelopment Analysis.‖ IEEE Transactions on
Engineering Managrment, vol. 41, no. 3, pp. 291-301, Aug. 1994.
[9] A. Vaninsky, ― Efficiency of electric power generation in the United
States: Analysis and forecast based on data envelopment analysis.‖,
Energy Economics, vol. 28, pp. 326-338, 2006.
[10] All India Electricity Statistics , General Review , Central Electricity
Authority, New Delhi, 2004-2009.
[11] K. sarica and I. Or, ― Efficiency assessment of Turkish power plants
using data envelopment analysis.‖ ,Energy, vol. 32, pp. 1484-1499,
2007.

T
[12] R. F. Lovado, ― Benchmarking the efficiency of Philippines Electric
Cooperatives Using Stochastic Frontier Analysis and Data Envelopment
Analysis‖,Third East West Center International Graduate Student
Conference, Hawaii, Feb. 2004.
[13] T. Coelli, D.S. Prasado Rao, and George E. Battese, ― An Introduction
to Efficiency and Productivity Analysis.‖
[14] W.W. Cooper and K. Tone, ― Measures of inefficiency in data

[15]

[16]
A. Charnes, W.W. Cooper and E. Rhodes, ―
ES
envelopment analysis and stochastic frontier estimation.‖, European
Journal of Operational Research, 99(72-88), 1997.
Mesauring the efficiency
of decision making units‖, European Journal of Operational Research,
vol. 2, no. 6, pp 429-444.
R. Meenakumari and N. Kamraj, ― Measurement of Relative
Efficiency of State Owned Electric Utilities in India Using Data
Envelopment analysis.‖, Modern Applied Science, vol. 2, no. 5 , pp 61-
71, Sep 2008.
[17] V.K.Yadav, N.P. Padhy, and H.O.Gupta, ― Assessing the performance
of electric utilities of developing countries: An intercountry comparison
using DEA‖, IEEE Transaction.
[18] Tripta Thakur, ― Benchmarking study for the Indian Electric Electric
A
utilities Data Envelopment Analysis‖, IEEE Transactions on Power
Systems, pp 545-549, 2005.
IJ

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 Shafali Jain et al. / (IJAEST) INTERNATIONAL JOURNAL OF ADVANCED ENGINEERING SCIENCES AND TECHNOLOGIES
Vol No. 1, Issue No. 2, 064 - 078

TABLE IV

SFA PARAMETER ESTIMATIONS

Cobb Douglas (CD) Translog (TR)

Variables Parameters
Coefficient t-ratio Coefficient t-ratio
Production factors

Intercept β0 0.7578* 4.83 0.8429** 2.98

In(Installed capacity) β1 0.8170* 52.426 0.8399* 14.545

T
In(Coal consumption) β2 0.1144* 5.398 0.0873** 2.183
In(Installed capacity)*ln(installed capacity) β11 0.0703** 2.971
In(coal consumption)*ln(coal consumption) β22 0.0009 -0.561
In(Installed capacity)*ln(coal consumption) β12 0.0377** -2.36
In(Installed capacity)*time β1t 0.0051 -0.048
In(coal consumption)*time ES -0.0022 0.43
β2t
time βt 0.0048 0.648 0.0383 1.13
time*time βtt -0.0051 1.055
Inefficiency factors

Intercept δ0 -4.8666* -4.621 -5.1128* -5.64

In(Plant load factor) δ1 -0.9471** -3.215 -0.8651* -5.392
In(Energy losses) δ2 -1.1250* -6.203 -1.1422* -6.256
In(Per capita consumption) δ3 3.0131* -6.059 -3.0584* -10.103

Dummy (Regulation) δ4 0.0576** 2.214 0.0353 1.335

A
Dummy (Fuel type) δ5 -0.5815* -3.445 -7.09** -2.483

Variance factors
Sigma squared σ2 2.1342* 5.548 2.1275* 5.748
Gamma γ 0.9983* 993.63 0.9987* 1418.78
Loglikelihood function LLF -63.34 -57.55*
IJ

Note: This value is obtained from table 1 of Kodde and Palm (1986) which gives critical values for the tests of null hypotheses.
*,**,*** Estimate is significant at 1%, 5%, 10% level of significance respectively

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Vol No. 1, Issue No. 2, 064 - 078

TABLE V

SFA AND DEA EFFICIENCIES

2002-03 2003-04
S.No Utility
DEA CRS DEA VRS SFA CD SFA TR DEA CRS DEA VRS SFA CD SFA TR

1 Haryana 0.605 0.917 0.888 0.91 0.644 1 0.915 0.928

0.857
2 Himachal Pradesh 0.755 0.755 0.608 0.67 0.857 0.866 0.927
0.396

T
3 Jammu & Kashmir 0.212 0.212 0.158 0.18 0.396 0.361 0.42
4 Punjab 0.607 0.995 0.954 0.96 0.626 1 0.964 0.965
5 Rajasthan 0.687 1 0.961 0.97 0.597 0.947 0.892 0.905
6 Uttar Pradesh 0.596 0.915 0.879 0.91 0.583 0.933 0.854 0.875
7 Uttrakhand 1 1 0.808 0.83 1 1 0.955 0.971
8 Delhi 0.442 0.721 0.64 0.64 0.621 1 0.907 0.901
9

10
11
12
13

14
Gujarat

Madhya Pradesh
Chhattisgarh
Maharashtra
Goa

Andhra Pradesh
0.624

0.615
0.692
0.593
0.864

0.541
ES 1

0.896
1
1
0.864

0.871
0.95

0.922
0.943
0.941
0.806

0.858
0.96

0.94
0.95
0.92
0.84

0.86
0.605

0.576

0.667
0.594
0.586

0.499
0.997

0.909
1
1
0.586

0.893
0.936

0.871
0.918
0.944
0.565

0.81
0.932

0.876
0.907
0.914
0.574

0.784
15 Karnataka 0.498 0.859 0.785 0.79 0.506 1 0.836 0.812
16 Kerala 1 1 0.737 0.59 1 1 0.677 0.549
17 Tamil Nadu 0.531 0.866 0.889 0.87 0.462 0.818 0.793 0.752
18 Puducherry 1 1 0.957 0.96 1 1 0.952 0.934
A
19 Bihar 0.122 0.229 0.193 0.19 0.088 0.15 0.143 0.139
20 Jharkhand 0.295 0.498 0.47 0.47 0.321 0.511 0.496 0.489
21 Orissa 0.314 0.473 0.466 0.48 0.468 0.856 0.745 0.746

22 West Bengal 0.566 0.872 0.853 0.88 0.58 0.93 0.854 0.873
23 Sikkim 0.144 0.144 0.144 0.14 0.122 0.122 0.124 0.119
IJ

24 Assam 0.399 0.399 0.321 0.35 0.293 0.293 0.291 0.32

25 Manipur 0.003 0.003 0.003 0 0.003 0.003 0.003 0.003
26 Meghalaya 0.734 0.734 0.548 0.66 0.619 0.619 0.543 0.647
27 Nagaland 0.096 1 0.1 0.09 0.1 1 0.102 0.09
28 Tripura 0.582 0.582 0.443 0.53 0.72 0.72 0.625 0.732

29 Arunachal Pradesh 0.088 0.088 0.082 0.08 0.102 0.102 0.105 0.099
30 Mizoram 0.036 0.036 0.036 0.04 0.038 0.038 0.04 0.037
Mean 0.508 0.697 0.838 0.62 0.509 0.722 0.636 0.641

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Vol No. 1, Issue No. 2, 064 - 078

2004-05 2005-06

SFA
S.No Utility DEA CRS DEA VRS SFA CD SFA TR DEA CRS DEA VRS SFA CD TR
1 Haryana 0.456 0.667 0.665 0.6695 0.659 0.857 0.87 0.881
2 Himachal Pradesh 1 1 0.836 0.9107 1 1 0.805 0.894

3 Jammu & Kashmir 0.362 0.362 0.275 0.3225 0.421 0.421 0.307 0.369
4 Punjab 0.553 0.856 0.898 0.8763 0.682 0.932 0.962 0.961
5 Rajasthan 0.649 0.951 0.933 0.9439 0.77 1 0.962 0.973

6 Uttar Pradesh 0.524 0.769 0.76 0.7723 0.538 0.724 0.724 0.737
7 Uttrakhand 1 1 0.681 0.7174 0.977 0.977 0.754 0.814
8 Delhi 0.693 1 0.951 0.9491 0.726 0.969 0.931 0.92
9 Gujarat 0.68 1 0.97 0.9714 0.706 1 0.959 0.961

10 Madhya Pradesh 0.567 0.829 0.847 0.8446 0.558 0.725 0.74 0.754
11 Chhattisgarh 0.695 1 0.934 0.83 1 0.968

T
0.9203 0.968
12 Maharashtra 0.592 1 0.935 0.8977 0.623 1 0.919 0.879
13 Goa 1 1 0.914 0.9271 1 1 0.936 0.949

14 Andhra Pradesh 0.545 0.974 0.878 0.8443 0.528 0.863 0.799 0.763
15 Karnataka 0.468 1 0.78 0.7448 0.488 0.779 0.767 0.729
16 Kerala 0.858 1 0.77 0.639 1 1 0.884 0.759
17
18
19
20
21

22
Tamil Nadu
Puducherry
Bihar
Jharkhand
Orissa

West Bengal
0.457
1
0.041
0.302
0.524

0.613
ES 0.84
1
0.077
0.439
0.981

1
0.786
0.946
0.068
0.456
0.823

0.934
0.7347
0.918
0.0669
0.4456
0.8197
0.9332
0.465
1
0.04
0.351
0.457

0.696
0.814
1
0.063
0.464
0.63

1
0.757
0.9
0.066
0.49
0.66

0.983
0.7
0.854
0.067
0.481
0.661
0.983
23 Sikkim 0.201 0.201 0.199 0.1899 0.1 0.1 0.095 0.096
24 Assam 0.171 0.36 0.347 0.3645 0.194 0.351 0.333 0.357
25 Manipur 0.004 0.004 0.004 0.0037 0.006 0.006 0.005 0.006
26 Meghalaya 0.753 0.753 0.571 0.6844 0.616 0.616 0.46 0.559
A
27 Nagaland 0.015 1 0.015 0.0132 0.015 1 0.014 0.013
28 Tripura 0.881 0.881 0.676 0.7944 0.709 0.709 0.532 0.64

29 Arunachal Pradesh 0.007 0.007 0.072 0.07 0.132 0.132 0.117 0.125
30 Mizoram 0.016 0.016 0.014 0.0147 0.027 0.027 0.024 0.026
Mean 0.52 0.732 0.631 0.63 0.438 0.705 0.624 0.63
IJ

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Vol No. 1, Issue No. 2, 064 - 078

2006-07 2007-08
S.No Utility
DEA CRS DEA VRS SFA CD SFA TR DEA CRS DEA VRS SFA CD SFA TR

1 Haryana 0.664 1 0.894 0.9139 0.569 0.802 0.774 0.809

2 Himachal Pradesh 0.93 0.93 0.728 0.8194 0.97 0.97 0.874 0.947

3 Jammu & Kashmir 0.579 0.579 0.411 0.5025 0.588 0.588 0.475 0.57
4 Punjab 0.63 0.99 0.945 0.9455 0.668 0.978 0.954 0.965
5 Rajasthan 0.643 0.976 0.9 0.9189 0.701 0.981 0.938 0.962

6 Uttar Pradesh 0.551 0.825 0.765 0.7852 0.552 0.773 0.745 0.782
7 Uttrakhand 0.869 0.869 0.682 0.7121 0.787 0.787 0.741 0.727
8 Delhi 0.646 1 0.877 0.8721 0.703 1 0.898 0.908
9 Gujarat 0.651 1 0.942 0.9434 0.713 1 0.962 0.973

10 Madhya Pradesh 0.573 0.867 0.799 0.8185 0.532 0.745 0.733 0.765

T
11 Chhattisgarh 0.684 1 0.906 0.8995 0.51 0.713 0.716 0.733
12 Maharashtra 0.589 1 0.906 0.8662 0.616 1 0.912 0.898
13 Goa 1 1 0.929 0.9624 0.971 0.971 0.772 0.865

14 Andhra Pradesh 0.51 0.919 0.798 0.7681 0.566 0.97 0.798 0.848
15 Karnataka 0.551 1 0.882 0.8529 0.53 1 0.882 0.826
16
17
18
19
20
21
22
Kerala
Tamil Nadu
Puducherry
Bihar
Jharkhand
Orissa
West Bengal
1
0.485
1
0.021
0.429
0.552
0.673
ES 1
0.948
1
0.046
0.653
0.982
1
0.889
0.817
0.924
0.041
0.608
0.825
0.905
0.7952
0.7581
0.9186
0.0453
0.6043
0.8374
0.9322
0.503

0.067
0.361
0.548
0.517
1

1
1
0.962
1
0.124
0.516
0.929
0.724
0.889
0.817
0.924
0.041
0.608
0.825
0.905
0.918
0.785
0.851
0.12
0.511
0.838
0.747
23 Sikkim 0.105 0.105 0.1 0.1044 0.449 0.449 0.1 0.423
24 Assam 0.375 0.375 0.269 0.323 0.86 0.86 0.269 0.888
25 Manipur 0.016 0.016 0.015 0.0163 0.063 0.063 0.015 0.059
26 Meghalaya 0.476 0.476 0.342 0.741 0.741 0.342
A
0.4351 0.754
27 Nagaland 0.131 1 0.128 0.1215 0.409 1 0.128 0.376
28 Tripura 0.807 0.807 0.584 0.7363 0.934 0.934 0.584 0.921
29 Arunachal Pradesh 0.169 0.169 0.142 0.1623 0.438 0.438 0.142 0.415
30 Mizoram 0.028 0.028 0.024 0.0277 0.158 0.158 0.024 0.15
Mean 0.544 0.752 0.632 0.65 0.6 0.772 0.632 0.71
IJ

TABLE VII

SFA ELASTICITIES

With respect to Estimated elasticity

Installed capacity (E1) 0.817
Fuel (E2) 0.114
Time 1.0048
Returns to scale 0.931

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Vol No. 1, Issue No. 2, 064 - 078

TABLE VI

SFA AND DEA AVERAGE EFFICIENCIES

S.No Utility DEA CRS DEA VRS SFA CD SFA TR

1 Haryana 0.588 0.874 0.834 0.852

2 Himachal Pradesh 0.862 0.919 0.786 0.862

3 Jammu & Kashmir 0.523 0.426 0.331 0.395

4 Punjab 0.584 0.959 0.946 0.945

5 Rajasthan 0.66 0.976 0.931 0.946

T
6 Uttar Pradesh 0.596 0.823 0.788 0.81

7 Uttrakhand 0.866 0.939 0.77 0.796

8 Delhi 0.68 0.948 0.867 0.865

9 Gujarat 0.667 1 0.953 0.956

10 Madhya Pradesh 0.595 0.829 0.819 0.833

11

12

13

14
Chhattisgarh

Maharashtra

Goa

Andhra Pradesh
ES 0.634

0.636

0.841

0.61
0.952

0.904

0.915
0.898

0.926

0.82

0.824
0.896

0.897

0.853

0.811

15 Karnataka 0.514 0.94 0.822 0.793

16 Kerala 0.891 1 0.808 0.709

17 Tamil Nadu 0.573 0.875 0.81 0.767

A
18 Puducherry 0.911 1 0.934 0.905

19 Bihar 0.223 0.115 0.092 0.105

20 Jharkhand 0.291 0.514 0.521 0.5

21 Orissa 0.46 0.809 0.724 0.73

22 West Bengal 0.568 0.921 0.906 0.891

IJ

23 Sikkim 0.286 0.187 0.127 0.179

24 Assam 0.366 0.44 0.305 0.434

25 Manipur 0.047 0.016 0.008 0.015

26 Meghalaya 0.555 0.657 0.468 0.624

27 Nagaland 0.228 1 0.081 0.118
28 Tripura 0.657 0.772 0.574 0.725
29 Arunachal Pradesh 0.252 0.156 0.11 0.159
30 Mizoram 0.068 0.051 0.027 0.048
Mean 0.541 0.730 0.627 0.647

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 Shafali Jain et al. / (IJAEST) INTERNATIONAL JOURNAL OF ADVANCED ENGINEERING SCIENCES AND TECHNOLOGIES
Vol No. 1, Issue No. 2, 064 - 078

Fig 1 S FA and DEA Efficiencies

DEA-TFPCH S FA (CD)-TFPCH S FA (TR)-TFPCH

2 .9

2 .5
Efficiency Score

2 .1

1.7

1.3

T
0 .9

0 .5

ES Utility

Fig 2 SFA and DEA TFP changes

A
DEA CRS DEA VRS SFA CD SFA TR

0 .8
IJ
TFP changes

0 .6

0 .4

0 .2

Utility

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TABLE VIII

SFA AND DEA TFP CHANGES

DEA SFA CD SFA TR

TFP
S.No Utility Efficienc Technical TFP Efficiency Technical TFP Efficienc Technica
Chang
y Change Change Change Change Change Change y Change l Change
e

1 Haryana 0.988 1 0.987 0.992 1.0048 0.997 0.996 1.028 1.024

2 Himachal Pradesh 1.051 1.038 1.092 1.092 1.0048 1.097 1.065 1.053 1.121
3 Jammu & Kashmir 1.226 1.034 1.268 1.332 1.0048 1.338 1.195 1.055 1.2617
4 Punjab 1.019 1 1.019 1.001 1.0048 1.006 1.006 1.024 1.030
5 Rajasthan 1.004 1 1.004 0.997 1.0048 1.001 1.001 1.025 1.026

T
6 Uttar Pradesh 0.985 1 0.984 0.969 1.0048 0.973 0.986 1.022 1.008
7 Uttrakhand 0.953 1.039 0.991 0.999 1.0048 1.003 1.007 1.051 1.059
8 Delhi 1.097 1 1.097 1.082 1.0048 1.087 1.054 1.036 1.092
9 Gujarat 1.027 1 1.027 1.003 1.0048 1.008 1.009 1.020 1.028
10 Madhya Pradesh 0.971 1 0.971 0.957 1.0048 0.962 0.979 1.025 1.003
11 Chhattisgarh 0.941 1 0.941 0.951 1.0048 0.955 0.97 1.030 1.000
12
13
14
15
16
17
18
19
Maharashtra
Goa
Andhra Pradesh
Karnataka
Kerala
Tamil Nadu
Puducherry
Bihar
1.008
1.023
1.009
1.012
1
0.989
1
0.888
ES
1
1.013
1
1
1.096
1
1
1
1.007
1.036
1.009
1.012
1.096
0.989
1
0.887
0.994
1.033
1.002
1.017
1.059
0.987
0.988
1.109
1.0048
1.0048
1.0048
1.0048
1.0048
1.0048
1.0048
1.0048
0.999
1.038
1.007
1.022
1.064
0.992
0.993
1.114
1.001
1.025
1.005
1.011
1.064
0.995
0.997
1.023
1.015
1.067
1.020
1.023
1.048
1.019
1.069
1.043
1.016
1.094
1.024
1.034
1.115
1.014
1.066
1.067
20 Jharkhand 1.041 1 1.041 1.024 1.0048 1.029 1.02 1.031 1.052
21 Orissa 1.117 1 1.117 1.146 1.0048 1.152 1.084 1.030 1.116
22 West Bengal 0.982 1 0.982 0.973 1.0048 0.978 0.988 1.024 1.011
23 Sikkim 1.256 0.999 1.254 1.586 1.0048 1.594 1.288 1.068 1.375
A
24 Assam 1.166 1.051 1.225 1.266 1.0048 1.272 1.164 1.051 1.223
25 Manipur 1.818 1.007 1.83 2.009 1.0048 2.019 1.574 1.067 1.680
26 Meghalaya 1.002 1.025 1.028 1.05 1.0048 1.055 1.033 1.060 1.095
27 Nagaland 1.337 1 1.337 2.864 1.0048 2.877 1.816 1.070 1.944
28 Tripura 1.099 1.023 1.124 1.118 1.0048 1.123 1.079 1.062 1.145
29 Arunachal Pradesh 1.379 1.001 1.381 1.469 1.0048 1.476 1.266 1.067 1.352
30 Mizoram 1.347 1.006 1.354 1.898 1.0048 1.907 1.434 1.067 1.530
IJ

Mean 1.347 1.006 1.354 1.2 1.0048 1.205 1.1 1.04 1.154

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