Local Electricity Distribution in Italy: Comparative Efficiency Analysis and Methodological Cross-Checking

Abstract

This paper analyzes the efficiency of Italy's local electricity distributors according to two different measurement techniques. Distribution zones belonging to the national monopolist (ENEL) are compared with municipally-owned utilities (MUNIs) which serve individual towns and are usually owned by City Councils (with a few of them currently undergoing privatization). ENEL-MUNI comparisons are displayed subject to a number of caveats, and statistical techniques are used in order to cross-check the results stemming from different methodologies. The paper's main finding is that comparative efficiency analysis failed to spot any systematic efficiency superiority of ENEL's local units over municipal utilities. Overall efficiency comparison outcomes were mixed, thus suggesting that a case-by-case approach should be adopted by Italy's regulatory and governmental authorities when dealing with the territorial reform of electricity distribution. Similarly, any ownership transfers and/or mergers involving ENEL?s units and MUNIs should depend on the varied efficiency records which were detected according to different regional and economic scenarios.

JEL Classification: L94