Efficiency of Generation Companies in the Deregulated Electricity Market of Singapore: Parametric and Non-Parametric Approaches

This study examines the technical efficiency of the electricity generation companies in a deregulated electricity market. Two approaches are used – parametric and non-parametric. Parametric models show that there exist high levels of efficiency among the generation firms; the lowest score is 99.83%, after accounting for noise. While non-parametric models do not give efficiency scores as high as those from the parametric models, the lowest is still 89.75%, which is considerably high. Although the correlation of efficiency results from both types of models is poor, the generation firms have considerably high efficiency levels in each model. In addition, non-parametric models have given insight on how firms could improve their efficiency by such a way that it replicates the input combinations of the efficient benchmark firm(s).