The Evolution of the Benchmarking Methodology Data Envelopment Analysis - DEA in the Cost Regulation of the Brazilian Electric Power Transmission Sector: a critical look at the renewal of concessions

Abstract: In 2012, the Federal Government announced a reduction of around 18% of the electric energy tariff going to the consumer. It was up to the National Electric Energy Agency (ANEEL) to create a model that led to the reduction projected by the authorities. To reach this level, the Ministry of Mines and Energy proposed that the electric power transmission concessions be renewed in advance, according to new rules (MP 579/2012 and Law 12.783/2013). An important part of the new rules was the calculation of efficient operational cost through Data Envelopment Analysis - DEA, a methodology already used by ANEEL in two tariff reviews. The objective of this article was to study the evolution of the efficient operational cost calculation models adopted at these times. This analysis showed that ANEEL still needs to promote improvements in the modeling to better represent the operational reality of the concessionaires and eradicate the need for adjustments that reduce the reliability and transparency of the process.