Productivity Development Among Norwegian Electricity Distribution System Operators — The Impact of Capital Assessment and Technological Progress^*

Based on data from 2004 to 2014, we analyse the development in productivity for Norwegian electricity distribution system operators (DSOs). This time span covers the effects of different incentive schemes from three regulatory periods. There is also impact of technological progress due to increased use of information technologies in “smarter” networks. Our main contribution is a presentation and discussion of factors that influence the results, especially measurement of capital, technological progress and the use of indexes. The yearly average increase in productivity is estimated to 1.3%. However, there are variations across the years and between the DSOs. We observe that different incentive schemes influence productivity. In addition, events like extreme weather conditions have an impact in certain years. Another result is that larger DSOs on average have higher productivity than smaller DSOs. One reason may be increased economies of scale partly due to the ongoing process of utilisation of smart grid technologies.