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A Cost Frontier Model for Indian Electricity Generating Utilities: A Stochastic Approach

An econometric cost frontier model is applied to a sample of 30 electricity generating utilities operating in India for the panel data of 4 years from 2010-11 to 2013-14. The objective of this study is to contribute to a deeper understanding of which factors influence cost inefficiency in electricity generation. The results show significant opportunities for cost reduction in the generation industry that could result in price reductions to electricity consumers.