Has the market-oriented reform of 2015 affected the performance of China's power grid firms?

Abstract

The efficiency analysis of incentive regulations on utilities is an important issue to investigate the impact of the market-oriented reform. This paper analyzes the influence of the 2015 reform on 30 provincial power grid firms in China during 2011–2018. We employ a data envelopment analysis (DEA) model combined with bootstrap estimation to measure the efficiency through statistical inference, from both static and total factor productivity (TFP) perspectives. The results show that most provincial grid firms are difficult to achieve efficiency improvement by putting forward the reform in the short-term. However, the positive correlation between market transactions and efficiency indicates that the market-oriented reform improves efficiency significantly. Nevertheless, the gap between the studied DMUs and the efficient ones is the result of regional differences and the significant influence of weather heterogeneity.