Measuring Economic Efficiency of Electricity Distribution Companies in Iran

The purpose of this study is to estimate economic efficiency of electricity distribution companies in Iran and to find out its determinants using Stochastic Frontier Approach. To this end panel data of 41 companies for the period 2003-2006 was collected and economic efficiency has been estimated using Battese and Coelli’s error comonent (1992) and inefficiency effects (1995) models. The findings of the research showed that the average economic efficiency of electricity distribution companies in Iran during the studied period are 1.74 and 1.65 according to Battese and Coelli’s first and second models, respectively. Among the determinants of economic efficiency of these companies, the ratio of bank employees qualified with university education and working years have most influence on efficiency. Ghom and Gilan companies are ranked the highest and lowest level of economic efficiency in the studied period, respectively.