DECOMPOSING ECONOMIC INEFFICIENCY IN BASE-LOAD POWER-PLANTS

Over the last decade, improving the performance of infrastructure indu stries has been the main focus of Australia's ongoing ''microeconomic reform'' program. The development and application of performance measu res has been central to the reform process. In the electricity industr y, a number of studies have quantified differences in economic efficie ncy using the multilateral total factor productivity and data envelopm ent analysis techniques. While both techniques aim to measure the same phenomena, rarely have the results obtained using the two techniques been compared using an identical database. A principal objective of th is article is to compare the results from the two techniques using a d atabase made up of observations from the Australian Loy Yang A base-lo ad power plant and a range of similar plants in North America. The art icle also illustrates the use of international benchmarking as a tool for productivity enhancement. International benchmarking is playing a key role in the reform of Australia's infrastructure industries by pro moting indirect or yardstick competition, by highlighting the need for further reform, and by building a consensus for implementing necessar y changes.