Efficiency Benchmarking of the Swedish Distribution System Operators Using the Convex Pairs Approach

The objective of this thesis is to implement the Convex Pairs approach, using an alternative convexity hypothesis to benchmark Swedish electricity distributors (DSO). Three models are developed, the first two being the classical approaches under the hypothesis of the Free Disposability Hull and of Varying Returns to Scale. The third is developed as an algorithm that creates artificial Convex Pairs based on the real observations, using blocking and polyhedron theories. It has the advantage to neglect the assumption of convexity in the technology set, which reflects the economic reality in some situations. An efficiency index is then implemented by solving as many linear programming problems as there are firms analysed. We implemented this algorithm for 40 DSOs characterised by 1 input and 5 output variables. In total, 174 non-dominated pairs were kept among all those created by the algorithm. The median efficiency using the new approach is found between those for FDH and VRS efficiency. However, the difference between the convex pairs approach efficiency and the VRS efficiency is too large to use the two as equivalent, depending on the convexity assumption required.