Efficiency analysis and benchmarking

Comparative efficiency analysis and benchmarking are crucial to effective utility regulation and have been used extensively by regulators to inform their decisions. 

The use of yardstick regulation, and efficiency and benchmarking techniques in support of this, are designed to:

• provide companies with strong incentives to pursue efficiency gains; and
• ensure that the benefits of efficiency gains are passed on to customers within a reasonable timeframe.

Frontier Economics applies well-recognised benchmarking techniques for utility clients across a range of sectors. Frontier Economics in Australia has recently undertaken total factor productivity studies for major metropolitan water businesses.