Scale efficiency gains in utilities? The case of electricity distribution in New Zealand*

Figures & data

Figure 1. Descriptive representation of merger gains.

Figure 2. EDBs’ average asset operating costs, scale and density, 2022.

Note: The heat map depicts 2022 annual regulatory filings. The EDB boundaries are taken from https://critchlow.carto.com/tables/networkboundariesplustrees/public.

Figure 3. EDBs’ per unit asset operating costs, scale and density of operation, firm-year reporting 2013–2022.

Note: Data sourced from NZ Commerce Commission regulatory filings between 2013 and 2022.

Table 1. Determinants of average operating costs for EDB’s.

	(1)	(2)	(3)	(4)	(5)	(6)
Dependent variable	Ln(AOC/total energy delivered)		Ln(AOC/number of customers)		Ln(AOC/maximum demand)
Independent variables
ln(Total energy delivered)	−0.2086***	−0.0342
	(0.0472)	(0.0351)
ln(Total energy density)		−0.4540***
		(0.0804)
ln(Number of customers)			−0.1499***	−0.0257
			(0.0380)	(0.0260)
ln(Number of customers density)				−0.4153***
				(0.0440)
ln(Maximum demand)					−0.2543***	−0.0158
					(0.0530)	(0.0353)
ln(Maximum demand density)						−0.5115***
						(0.0624)
SAIFI	0.0144	0.0116	0.0173**	0.0133*	0.0134	0.0107
	(0.0090)	(0.0083)	(0.0080)	(0.0076)	(0.0089)	(0.0078)
ln(Regional GDP)	−0.0354	−0.0375	0.1114	0.1080	−0.0480	−0.0508
	(0.1009)	(0.0800)	(0.1141)	(0.1298)	(0.1007)	(0.0865)
Broad region consumer price inflation	−0.5127	−0.2805	0.0656	−0.0783	0.5031	0.3747
	(1.5919)	(1.6609)	(2.1685)	(2.1231)	(1.5201)	(1.6109)
Constant	5.7615***	3.8612***	0.2767	−0.0081	7.3734***	4.5370***
	(1.1202)	(0.8024)	(1.1897)	(1.3975)	(1.1464)	(0.8905)
Year fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Observations	290	290	290	290	290	290
R-squared	0.3411	0.6422	0.3149	0.7098	0.3175	0.7435

Note: Random effects panel regression. Cluster-robust standard errors reported in parentheses. *, ** and *** indicate statistical significance at the 10, 5 and 1 percent level respectively.