On 15 October 2018, we published a final report from Sapere Research Group and Merz Consulting about operating environment factors for electricity distribution network service providers. The analysis in this report will feature in our 2018 benchmarking report for distribution network service providers which we will publish by 30 November 2018.
Sapere-Merz’s report suggests potential improvements to our data sources that we should consider as part our continuous improvement of our economic benchmarking techniques and quantifying the impact of material operating environment factors. We will consult with the distribution industry as part of our next steps in refining the assessment and quantification of operating environment factors.
Background
In the annual benchmarking reports, we examine the relative efficiency of the distribution and transmission electricity network service providers. In doing this we consider the characteristics of each network business, and how their productivity compares at the aggregate level given the outputs they deliver to consumers.
As part of our benchmarking toolkit, we also analyse the operating environment factors that may be unique to particular network service providers and which are not captured by our econometric benchmarking models. This helps us to identify the material factors driving apparent differences in estimated operating efficiency between the distribution networks in the NEM.
As part of the continuous improvement of our economic benchmarking techniques, we have reviewed and refined our analysis of operating environment factors in consultation with industry and other interested parties.
In undertaking this review, we have engaged economic and engineering consultants Sapere Research Group and Merz Consulting to:
- identify the most material operating environment factors driving apparent differences in estimated productivity and operating efficiency between the distribution networks in the NEM, and
- quantify the likely effect of each factor on operating costs in the prevailing conditions.