The Effect of Market Restructuring on Technical Efficiency of Thermal Power Plants in Iran

Economics development has always been along with increasing demand for electricity. This has led to significant attention to efficiency improvement of electricity production especially in developing countries. In recent decades، many countries introduce competition in power market by restructuring and liberalization policies to achieve proper efficiency level in electricity production. In Iran، substantial reforms occurred in electricity industry structure after establishing power market in 2003. After a decade of reforms in power market، it is necessary to investigate the effect of these reforms on electricity supplier performance، since it will be helpful for progress of electricity industry restructuring and implementing similar reforms in other network industries. The aim of this study is examining the effect of market restructuring on technical efficiency in thermal power plants of Iran. For this purpose، technical efficiency of 35 thermal power plants has been calculated during the period 1999 to 2011 using Stochastic Nonparametric Data Envelopment (StoNED) method، then the impact of market restructuring on technical efficiency has been estimated by applying Panel Data Tobit model. Results indicate that market restructuring has had positive effect on technical efficiency of steam and gas power plants.