Measuring the Efficiency of the Electricity Generating Sector Using a Stochastic Frontier Model

This article provides a detailed analysis on the efficiency of the Colombian electricity generating sector during the period between the years of 2002 and 2005 using a stochastic frontier model. This model can be used to provide empirical evidence on the efficiency of the generating sector, thermal units in particular, given the critical cost variables such as variable and input costs as well as the installed capacity. It should be noted that thermal generating capacity accounts for over 30% of the total installed capacity in Colombia and plays a crucial role in assuring the system's reliability under critical conditions