Performance Assessment of Japanese Electric Power Industry: DEA Measurement with Future Impreciseness

Abstract

This study examines the performance of Japanese electric power companies from 2003 to 2020. We use an observed data set from 2003 to 2015 and a forecasted data set from 2016 to 2020. The Japanese deregulation of the industry needs to be completed by April 2020. As a method, this study uses data envelopment analysis (DEA) environmental assessment, which measures performance from a holistic perspective. This research adds a new analytical capability to the DEA-based assessment by including an analytical ability to handle an “imprecise” data set. We apply the proposed approach to investigate the performance of these companies before and after the disaster of Fukushima Daiichi nuclear power plant (11 March 2011). All electric power companies have suffered from business damage due to the nuclear disaster. The Japanese government has developed a policy scheme on how to recover from the huge handling costs resulting from the disaster. Nuclear energy has been long considered the most useful approach to handle climate change. However, many industrial nations have changed policy direction since the nuclear disaster. The Japanese government allocates the costs to not only Tokyo Electric Power Company, which produced the nuclear disaster, but also the other incumbent electric power companies that own nuclear power plants. Under the current Japanese scheme, financial conditions have been gradually recovering from the damage due to the managerial efforts and by indirectly allocating the expenditure to consumers and tax payers.