The Study Of Cost Efficiency Of Chinese Listed Power Generation Companies Based On SFA

The market-oriented reform in 2002 had a significant impact on the development of electricity industry. The core content of this reform was separation of generation from transmission, separation of transmission and distribution, main-supplement separating and bidding on power net. So studying the performance of power generation can not only evaluate the reform objectively, but also provide an empirical basis for next round of reform and the development of industry. The paper first summarizes the reform process of Chinese electricity industry and organizational structure of power generation industry. Then the paper estimate the cost efficiency of 25 listed power generation companies during 2006 to 2013 based on SFA and cost frontier model. Furthermore, the paper analyzes the relationship between cost efficiency and other factors, such as market structure, property right structure, firm size and type. The main innovation of the paper is to choose cost efficiency to represent performance. Cost efficiency contains Technical efficiency and distribution efficiency, and it can reflect performance synthetically.Based on empirical research, some conclusions are made. (1)The efficiency of power generation during 2006-2013 slightly decreased, from 0.8555 to 0.8445, and there was 12% inefficiency among all samples. The difference of cost efficiency between companies was obvious. It implied that the introduction of competition had little effect on the cost optimization for power generation companies. (2)The cost efficiency of thermal power companies was higher than that of hydropower companies on the condition that we ignore the environmental cost (3)The proportion of state-owned assets and market concentration were negatively related with cost efficiency. And firm size and proportion of fixed assets were also negatively related with cost efficiency. Cost efficiency is regarded as the core of allocation of resources of electricity industry. In order to improve the cost efficiency of firms, measures should be taken to reduce the market concentration, to promote property reform and company governance. At the same time, a multilateral power market should be established. In the aspects of power structure, tax policy can be used to promote the development of clean energy power generation. The measures are the foundation of next round of electricity reform.