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Article
Publication date: 14 September 2010

H. Omrani, A. Azadeh, S.F. Ghaderi and S. Aabdollahzadeh

The purpose of this paper is to present an integrated algorithm composed of data envelopment analysis (DEA), corrected ordinary least squares (COLS) and principal component…

Abstract

Purpose

The purpose of this paper is to present an integrated algorithm composed of data envelopment analysis (DEA), corrected ordinary least squares (COLS) and principal component analysis (PCA) to estimate efficiency scores of electricity distribution units.

Design/methodology/approach

Several DEA and COLS models are prescribed and their results are verified and validated by the algorithm. To calculate efficiency scores, three standard internal consistency conditions between DEA and COLS results are checked by the algorithm. If these conditions are satisfied, DEA is chosen as the superior model because it could be used for optimization as well. Otherwise, the geometric mean of DEA and COLS model is used as the final efficiency scores.

Findings

The algorithm of this paper may be easily applied to decision‐making units because of its robustness (combined DEA‐COLS input and output) and validity gained through PCA.

Originality/value

The integrated approach has several unique features which are: verification and validation mechanism by PCA, consideration of internal consistency conditions between DEA and COLS and consolidation of DEA and COLS for improved ranking given consistency conditions are violated.

Details

International Journal of Energy Sector Management, vol. 4 no. 3
Type: Research Article
ISSN: 1750-6220

Keywords

Article
Publication date: 18 November 2013

Guendalina Capece, Francesca Di Pillo and Nathan Levialdi

In the last decade, the Italian natural gas market has undergone profound changes. The slow ongoing process of liberalization that began in 2000 has produced many changes in the…

Abstract

Purpose

In the last decade, the Italian natural gas market has undergone profound changes. The slow ongoing process of liberalization that began in 2000 has produced many changes in the industry as companies have had to react to the new regulatory framework. Many companies have sought agreements, alliances and mergers to consolidate their position in the market, other companies have sought to diversify their product range by becoming multi-utility companies, others, unable to react to the new competitive pressures, have gone bankrupt. The aim of the work is to analyse the performance of natural gas retail companies after the liberalization of the sector.

Design/methodology/approach

The authors carry out a financial statement analysis for indexes in order to evaluate business management in terms of the financial, profitability and liquidity aspects. The authors analysed a sample of 111 companies operating in Italy for a six-year period (2004-2009) following the full liberalization of the sector (January 1, 2003).

Findings

Results show that many of the firms in the sample are suffering from a reduction in profits and present serious financial weaknesses. In particular, the companies that perform the worst are the small, new entrants and those in the south of Italy. In regard to the new entrants it should be noted that although more than ten years have passed since the beginning of the liberalization process, entry barriers are still present. As regards the business diversification, the best financial and operating results are achieved by large firms, listed companies and those which grew mainly through M&As.

Research limitations/implications

Even though there are numerous theoretical and empirical studies on the effects of diversification strategies and M&As, very few researchers have analyzed these effects in the context of a liberalization process of an energy sector. Starting from this gap in the literature, the work aims to analyse the strategies implemented by the Italian companies in the natural gas retail segment.

Practical implications

The empirical findings will help the policy makers of Italy in understanding that more than ten years since the beginning of the natural gas market liberalization, entry barriers are still present. Although all consumers have been free to choose their supplier since 2003, the incumbent firms have maintained a dominant position in the market, thanks to a “weak” unbundling (often the incumbent retail operator belongs to the same group as the distribution network operator) and to the advantage in the supply phase by means of a long-term contract with a “take or pay” clause.

Originality/value

Italy has always been characterized by the centrality of natural gas in its energy basket and it is the third European country for annual consumption. Despite the importance of this energy source, no substantial work has been done in this regard with reference to Italy.

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