Weight Limits in the DEA Benchmarking Model for Brazilian Electricity Distribution Companies

The periodic tariff review process is applied to tariff control and regulation of electrical energy distribution system. In Brazil, the method used to obtain the efficient operational cost (OPEX) is a benchmarking technique based in linear programming called Data Envelopment Analysis (DEA). This paper presents an analysis of the DEA applied to the Brazilian distribution companies focusing on the weight restrictions incorporated by the regulatory agency. An alternative technique, the Ratio-based Efficiency Analysis (REA) is also applied to the analysis to provide additional information regarding the performance of DEA coupled with weight restrictions for the Brazilian case.