1148

IEEE TRANSACTIONS ON POWER SYSTEMS, VOL. 21, NO. 3, AUGUST 2006

Establishing Quality Performance of Distribution

Companies Based on Yardstick Regulation
J. E. Pinheiro dos Santos Tanure, Member, IEEE, Carlos Mrcio Vieira Tahan, and
J. W. Marangon Lima, Senior Member, IEEE

AbstractThis paper proposes a procedure and methodology for

performance target setting related to continuity metrics in electricity distribution networks. This proposal deals with one of the
key issues in the monopoly regulation, which is either the reduction of the information asymmetry among economic agents or the
emulation of a competitive environment in industry segments usually considered as natural monopolies. This paper develops an approach toward standard definitions for Customer Average Interruption Duration Index (DEC) and Customer Average Interruption Frequency Index (FEC) based on inter-companies comparative analysis.
This approach introduces productive efficiency concepts to the
definition of network performance. In order to do so, the data
envelopment analysis (DEA) technique, used for defining the efficiency frontier, was combined with the dynamic cluster technique,
oriented toward models of identification of similar networks. A
technique for comparative analysis was used for the definition of
the network expected performance. Examples with the Brazilian
electric systems are provided to clarify the methodology suggested
by this paper.
Index TermsData envelopment analysis (DEA), distribution
reliability, dynamic cluster analysis, quality performance, yardstick regulation.

In the suggested methodology, both techniques are used.

Initially the new alternative classification, the dynamic cluster
technique, aims at identifying similar networks that compose
the sets of consuming units. The DEA technique is then applied
to each formed cluster. The elements to be compared using
DEA technique are the sets that belong to the cluster obtained
previously. In order to use the DEA technique, it is necessary to
define the parameters that compose the inputs of the production units, which represent the continuity of electrical energy
supply through the energy network. Likewise, the outputs or
products are the reliability continuity indexes. This procedure
provides a way to establish the parameters that are necessary to
compare the performance of the distribution companies.
Examples with the Brazilian electric systems are provided to
clarify the methodology suggested by this paper.
II. REGULATING THE DISTRIBUTION SERVICE
CONTINUITY IN BRAZIL
In Brazil, the continuity of the distribution service is measured by using two sets of indicators: individual and collective
indicators. The DEC and FEC are collective indicators and are
used in this paper:

I. INTRODUCTION

HE challenge of optimizing the use of electrical systems must be considered as a constant task both for the
providers, once it maximizes their profits, and the Regulating
Commission, as an attempt to extend part of the benefits internalized by the providers to the society. This paper proposes
a methodology aiming at establishing performance goals for
the distributors, allowing the Regulating Commission to define
the Customer Average Duration Interruption Index (DEC)
and Customer Average Frequency Interruption Index (FEC)
continuity index standards for the distribution companies in an
environment where asymmetry of information is remarkable.
This paper uses two data analyzing techniques. One is related
to network classification techniques, introducing a dynamic
cluster technique when classifying sets of consuming units.
The other one uses a comparative performance analysis called
data envelopment analysis (DEA) for establishing quality
parameters regarding the distribution network.

Manuscript received August 22, 2005; revised March 23, 2006. This work
was supported in part by CNPq. Paper no. TPWRS-00531-2005.
J. E. P. S. Tanure is with the University of Salvador, Salvador, Brazil.
C. M. V. Tahan is with the University of So Paulo, So Paulo, Brazil.
J. W. Marangon Lima is with the Federal University of Itajub, Itajub, Brazil.
Digital Object Identifier 10.1109/TPWRS.2006.879283

DEC

(1)

FEC

(2)

where
number of consuming units that suffer from an
interruption from an event ;
duration of event ;
total number of events;
total number of consuming units of set of
consumers.
They are very similar to the well-known SAIDI and SAIFI,
respectively [1]. Aiming at standardizing the indicators as tools
that can be used for collecting, treating, and distributing data regarding service continuity, ANEEL, the Brazilian national regulating commission, enacted Resolution 024/2000 [2], incorporating the methodological advances of the regulations and concessions previously signed [3]. Based on the standardization obtained from this resolution, the conditions to use the comparative analysis proposed in this paper were established among distributors.

0885-8950/$20.00 2006 IEEE

TANURE et al.: ESTABLISHING QUALITY PERFORMANCE OF DISTRIBUTION COMPANIES

Resolution 024/2000 established the necessary conditions to

compare the performance of the distribution companies. This
resolution created the quality performance analysis based on divisions of the concession area named sets. Millions of sets were
then created, and the comparisons, which were primary done
company by company, changed to set by set. The central idea is
that the sets are better comparable instead of the company itself
where the performance average did not allow the same treatment
to all consumers with the same characteristics. Based on the sets,
which can be more homogeneous after a clustering process, it
is possible to address the performance goals in a more fair way.
This resolution describes the process of data collection, clustering, and the establishment of the goals. Although in the beginning there were many complaints of the distribution companies about the complexity of the quality regulation introduced,
now there is a common sense that this was necessary for the sake
of transparency of the whole process and, consequently, for diminishing the discretionary power of the regulatory board.
These indicators are gathered by a set of consumers pooled
from the areas that form the subsets of distribution concessions
[4]. The Brazilian regulator has a database of approximately
6000 sets all over the country, representing the distributors partitions, which allowed comparative analyses based on a significantly large database. Within context, it becomes possible to
perform this sort of comparative analyses, in some cases, even
for a single company. Notice that one distribution company may
have many sets of consuming units with different performance.
It is important to mention that from the customer point of
view, the interruptions are the distribution companys responsibility, no matter the origin of the fault. However, if the regulatory agency is comparing the performance of the sets, the external interruptions need not be included in the DEC and FEC
indexes.
III. SUGGESTED METHODOLOGY
The idea for implementing a comparative analysis lies on
combining the two techniques: dynamic clusters [5] and data
envelopment analysis [6]. This combination allows one to identify similar sets, or blueprints, by using a new grouping system
as an alternative to the traditional non-hierarchical cluster technique, which is currently used by ANEEL. After this identification comes a comparative analysis in order to identify the elements that offer a better performance in each cluster [7]. A similar approach using DEA and cluster analysis together is found
in [8] for urban public transportation but using cluster analysis
just to explain the results of DEA technique, not as a pre-classification purpose.
A. Methodological Approach Overview
Distribution network is usually built to meet pre-defined performance standards and its dimension is established by means
of a reliability study [1]. Normally defined on historical data obtained by the company, these standards carry management practices that can be subjected to improvement on every aspect. Network maintenance practices, crew training, and network reconfiguration are among the techniques and procedures that could
also be improved.

1149

TABLE I
POSSIBLE PARAMETERS TO BE USED IN COMPARATIVE ANALYSIS

In order to stimulate continuous performance improvement

within distribution companies, a comparative analysis among
them has proven to be an ideal way to obtain the bases for an
efficient regulation. Particularly in the energy sector, where the
distribution segment is characterized by a monopolistic activity,
these analyses are extremely relevant.
In terms of quality indicators, the need to establish performance standards for distribution networks places the regulatory
commission in an environment where there is considerable information asymmetry, for each distributor only carries information regarding its own performance possibilities.
In this environment, the regulatory commission needs to
rely on tools that allow the reduction of such asymmetry,
contributing to the determination of better and more appropriate quality goals for distributors. It is important to say that
underestimated goals may lead to a larger profit margin for
the distributors because networks will receive fewer investments, whereas unnecessarily overestimated goals will lead to
a greater investment in networks, which in turn will lead to
greater pressure toward raising the cost of energy.
This way, network elements can be seen as inputs to come
up with a determined quality standard for distribution systems.
This paper will try, as much as possible, to treat the existing
networks as producing units that bear the following elements:
inputs: installed capacity, network extension, maneuver elements, among others;
outputs: service quality measured by the DEC and the FEC.
Initially, one must consider that each set (a subset of the concession area) represents a producing unit. This set is usually a
city, a neighborhood, a rural area, etc., depending on the characteristics and importance they were given by the distributor.
These sets are characterized by an area that will be served, a
number of existing consumers, and a consumption standard associated to these consumers. Based on these attributes, which
are not subjected to the distributors control, it is possible to
identify similar sets, which will probably demand similar network configurations. Taking these sets as defining elements of a
producing unit, the use of determined quantitative network elements must be associated to certain performance standards.
This way, the methodology proposed here uses the cluster
analysis technique to establish which sets are similar. The parameters or attributes used for carrying out such classification
are described in Table I. The number of consumers, the total
load, and the area are the attributes used in this first stage.
It is important to mention that the parameters considered for
classifying the sets are not control variables for the companies.
Therefore, they need to adjust the inputs variables to attend the
consumers with a pre-specified quality.

1150

Once similar producing units are defined, i.e., the sets that
belong to the same cluster, the efficiency frontier identification
technique, DEA, is used for classifying them according to their
distances to these frontiers. In this second stage, data of the distribution network are considered as inputs (see Table I). Moreover, the operation and maintenance cost (O&M) are also included because they reflect how the companies should operate
their network.
In this case, the input is the regulated O&M derived from a
model company adjusted to the distribution profile. This model
company is used in the tariff revising process in Brazil. The
explanatory variables usually adopted to define this theoretical
company are the number of consumers, the extension of the concession area, number of posts, and the average distance between
them. As a result, this company is then expressed in terms of the
number of employees, number of vehicles, maintenance costs,
and administrative costs. The number of employees and vehicles are also transformed into costs using the average salary and
the car leasing costs of the region where the company is located.
These two techniques combined allow the regulator to establish performance goals for the existing sets by using the best
practices of the existing distributors as a reference. More details
of these techniques and their application to quality regulation
are described hereafter.
B. Dynamic Cluster
The dynamic cluster technique [5] was used for defining the
similar sets, and it was implemented according to the following
steps:
Step 1) Each element is considered as the geometric center
of the cluster to be created.
Step 2) Having defined the center, the degree of similarity is
determined for all the elements.
Step 3) A selecting criterion is established for the degree of
similarity between the center and each element.
Step 4) For each center, the most representative elements are
grouped based on their similarity.
Step 5) The main characteristics are then taken from the sets
formed.
Step 6) The whole process is repeated for each element.
The criterion used for defining the degree of similarity is
the Euclidian distance measured by the attributes. Before calculating this distance, a normalization procedure is carried out
for each attribute. The Gauss curve is regularly used for defining
the parameters for the normalization.
This algorithm allows the attainment of as many clusters as
there are elements being analyzed, thus making it possible to establish several selecting factors. For the suggested application,
the selecting criterion must provide a minimum number of elements necessary to perform the DEA efficiency frontier analysis, also observing the degree of dispersion among the elements
of the formed sets. This restrictive criterion guarantees that the
analyzed set will be formed by its most similar elements within
the studied universe.
C. Data Envelopment Analysis
DEA has become a practicable approach to evaluate the relative efficiencies of decision-making units (DMUs) in various

IEEE TRANSACTIONS ON POWER SYSTEMS, VOL. 21, NO. 3, AUGUST 2006

contexts. The DEA approach, called CharnesCooperRhodes

(CCR) model, was first introduced by Charnes et al. [6] to produce an efficiency frontier based on the concept of Pareto optimum. The DEA has been used with efficiency measuring purposes in various entities in the public and private sectors. As
far as distributing companies are concerned, this technique is
used to measure the relative efficiency of: service centers [7];
distribution utilities themselves [9]; and the distribution added
value [10]. The last two ones deal with the utility as a whole, i.e.,
each utility represents a producing unit or a DMU. In this paper,
a classification stage is derived first in order to guarantee that
only homogeneous units are compared. This pre-classification
is mainly necessary when continental countries like Brazil are
considered, where diversity in service rendering can be found,
even inside the concession area of a single distribution company. However, the main problem of splitting the company into
consuming sets or sets of consumers is related to the data. The
Brazilian regulator has successfully acquired the attributes described in Table I from the utilities, but a lot of work has yet to
be done.
Therefore, the sets of consumer units and the distribution
system associated are the DMUs. The DEA technique is then
applied to these producing units within the cluster defined in
the classification stage, where the dynamic cluster technique is
applied. The formulation is oriented to maximize production,
according to optimization problem shown in the following:

subject to

(3)
is the efficiency index for the DMU ,
are the
inputs (for instance: line_km,
are the
transformer installed capacity, etc.),
are the weighting factors
s outputs (DEC and FEC), and
that allow the convex combination of inputs and outputs for
the DMUs (in this paper, sets of consumer units with the
associated distribution networks).
can be better interpreted as the multipliers
The lambdas
that express how much it is needed to increase or decrease the
inputs or goods of one particular unit production to reach the
most efficient unit of production. This is the main idea of DEA,
i.e., trying to get the efficient frontier of a group of sets. After
this identification, the multipliers to be applied to the variables
in analysis are obtained, and then we find the values of the variables that equal the performance of this particular set to the efficient one.
This optimization problem (3) is a standard DEA formulation
[11], and in our case, the interest lies on the output efficiency
rather than on the input efficiency, because there is no possibility
of deactivating part of the existing distribution network.
where

TANURE et al.: ESTABLISHING QUALITY PERFORMANCE OF DISTRIBUTION COMPANIES

Equation (3) is then solved for each cluster element or DMU,

value. The element that reaches the
giving an associated
is the most efficient in the group. The remaining
value
elements present higher values, meaning that they have an efin relation to the benchmark. This relation is
ficiency of
useful for the regulator to define performance goals for the sets
of a given cluster.
There is, however, the need to adapt this general model for the
specific case studied here. Normally, given a fixed input quantity, the desired number represents the maximum possible outputs. In terms of quality, and especially with the DEC and the
FEC, which are used as outputs in this paper, the elements that
obtain the lowest values rather than the highest ones show a
better performance. In order to adapt these indexes to the DEA
general model, their output vector must undergo a transformation
(4)
where
adjusted quality index;
maximum value of the quality index related to
the cluster;
value to be adjusted;
minimum value of

The vector formed by the values of

becomes the new
output vector according to the general formulation. The value
is chosen from the degree of sensitivity to be inserted in the
problem. If is too large, the sensibility among the sets would be
. After some
lower, and if the is zero, it would have a null
attempts considering the Brazilian case, the value of one hour
showed good results for the DEC. Other types of transformation
instead of (4) may also be used, but this one already presented
good results. A detailed study was performed in [12].
D. Inputs, Outputs, and Goals
The definition of performance goals can be formulated based
on many attributes, such as the ones shown in Table I. In spite of
the large number of attributes whose use is feasible in this sort
of analysis, determining them becomes a major problem once
the distributors are demanded to perform a vast survey when
forming components of their networks, which does not always
take place.
As far as Brazil is concerned, the regulator, ANEEL, annually collects the following data for each set of consumers:
area, primary network extension, installed capacity, number of
consumers, and consumption. In addition, the analysis included
the costs regarding the operations and maintenance of each
company recognized by ANEEL in the process of tariff review.
These costs are distributed among the sets, considering they are
correlated with the network extension.
All of the process can be summarized as follows.
First, a classification of the sets is carried out. It is important
to bear in mind the need to identify the similar elements based
on the classification attributes. As the first column in Table I
shows, no internal aspect regarding the distributor is considered

1151

TABLE II
COMPANY EFFICIENCY (%)

in this classification, which means that only the information and

characteristics regarding the clients are taken into consideration.
Second, for each cluster, the DEA technique is used for identifying the efficiency frontier and the relative distance of the elements that belong to this cluster. Here, the inputs and outputs
represent internal characteristics of the distributors, displayed in
the second and third columns of Table I.
, and
Based on the efficiency attributed to each element
considering the relation input/output, the definition of the performance goals of this element can be obtained. In general, the
ANEEL is proposing that these goals are to be achieved within
two periods of tariff review, which means an eight-year time
span average. This process is then repeated for each tariff review. This definition and treatment involve setting decreasing
goals for every element. Therefore, the distribution company,
which is far from the efficiency frontier, has enough time to
adapt itself to the new target.
IV. CASE STUDY
In order to exemplify the suggested methodology, a case
study was initially developed relying on the help of the seven
main distributing companies in Brazil, i.e., CEMIG, CELESC,
COPEL, EBE, ELETROPAULO, COPEL, and ELEKTRO. In
this analysis, 924 sets of consumer units from these companies
were studied. The first analysis can be seen as the traditional
DEA analysis, where the DMUs represent the companies as
a whole. It shows the direct application of DEA to establish
quality performance. The second and the third analyses show
the application of the proposed method, where the DMUs
represent the sets of consumer units.
A. Company-Oriented Analysis
In this analysis, each company was considered as a producing
unit, i.e., the classification stage of the sets of consumer units
was skipped. These companies were considered as parts of a homogeneous group. Observe that this approach is similar to those
used in [9] and [10], but the difference is that in this paper, the
quality performance is the output variable. The results obtained
are listed in Table II. The values for DEC and FEC are global
average values for each company. The relevance of the input
group was also evaluated in different ways. For instance, in the
second column, three inputs were used: capacity of transformation (MVA), network extension (Km), and O&M. All these attributes underwent a normalization process. The values obtained
in percentage.
represent the efficiency

1152

The number of elements to be analyzed must be at least two to

three times the number of inputs. This constraint is a guarantee
that all elements will not be at the efficiency frontier, i.e., they
will not define this frontier [6], [11].
From the results obtained, the following are clear.
Regarding all considerations on inputs, CELESC seems to
be the company positioned on the efficiency frontier.
EBE could be taken as the second most efficient among the
analyzed companies, regardless of the input evaluated.
In the simulated scenarios, CEMIG shows the greatest insensitivity regarding the kind of input used, that is, its relative efficiency does not vary according to the change in the
input variables.
COPEL has proven to be extremely sensitive to O&M
costs. Its O&M management might be fundamental for
its overall efficiency. The absence of such input arouses a
significant variation in its performance, from 146.0% to
304.99%.
ELETROPAULO, on the other hand, showed a strong sensitivity toward the input network extension. This can be
explained because the ELETROPAULO concession area is
located at the highest density load of the country. If this
input variable is not taken into account, its performance
deteriorates from 161.78% to 599,15%.
CPFL shows strong sensitivity toward the parameters network expansion and installed capacity. These inputs are
most relevant to define the degree of efficiency. Nevertheless, their results are relatively stable within the analyzed
set, allowing the assumption that the management of the
three factors is well balanced. In all cases, their score varied
between 200% and 300%.
One of the crucial points regarding the use of the DEA is the
inclusion of scale economy. In this analysis, there was no consideration in relation to the scale of the considered producing
units. Therefore, their results are only good to evaluate the relative efficiency regarding the use of each input. Out of these results, three inputs were chosen to analyze the sets, that is, only
the ones listed in Table I.
B. Set Analysis
Among the 924 elements, which belong to the previously
mentioned companies, three elements or sets of consumers were
selected to exemplify the definition of the DEC and FEC goals.
The chosen elements were: ELETROPAULOs Airport area;
CELESCs Alfredo Wagner area; and EBEs Taubat area. In
order to determine the most similar elements, each one became
the geometric center of a cluster specifically adjusted for this
purpose. Given that there are three inputs, the nine most similar
elements within the considered universe were found. Then, the
degree of efficiency of this element was obtained when it was
compared with the other elements of this cluster.
As an example, Table III presents the values calculated for
the Airport set/element, as well as for the other elements that
belong to the Airport cluster. The performance goals differ for
each element of this cluster because of the difference on the
efficiency. In this particular case, all the elements belong to the
same company, showing that the analysis carried out on item A
has drawbacks because of the internal diversity.

IEEE TRANSACTIONS ON POWER SYSTEMS, VOL. 21, NO. 3, AUGUST 2006

TABLE III
CLUSTER WHERE AIRPORT AREA IS THE GEOMETRIC CENTER

TABLE IV
RESULTS OF THE SET ANALYSIS

TABLE V
RESULTS FROM THE INTERTEMPORAL ANALYSIS BY SET

From this table, Sao Paulo Centro and Sto Andre are at the
efficiency frontier and, therefore, are the benchmark for the Airport element, which can improve its performance in about 84%.
Table IV shows the results attained for the three elements,
including the Airport area.
Comparing the current DEC and FEC values of the three elements with their established goals by using the methodology
proposed by this paper, it is possible to see that the attained
results are perfectly consistent with the values in use, i.e., the
recommended goals for the fourth year are close to the current
values. One can also see that the Taubat set already presents
high efficiency; the proposed goals (6.58) are already close to
the current one (7.00).
This additional verification was made for all the elements.
The results attained were consistent.
C. Set Analysis Considering Two-Year Sample
In order to stabilize the analysis, a sample period of two years
was established in contrast with one year performed in item B.
Therefore, the analysis base was broadened considering the elements resulting from the sets classified for two consecutive
years. Table V shows the results obtained in this case.
As it was verified, the attained results are still consistent with
the values in use by ANEEL. The Taubat set is now considered
to be the efficiency frontier element. For this matter, no new
quality goals were assigned for this set.
V. CONCLUSIONS
The use of a comparative analysis among companies is an extremely useful tool in the relation between the regulator and the

TANURE et al.: ESTABLISHING QUALITY PERFORMANCE OF DISTRIBUTION COMPANIES

regulated companies. Nevertheless, the analytical techniques,

which support this analysis, depend on a massive amount of
good quality information and data. Most of the time, these data
depend on surveys carried out by the company itself, which may
weaken the reliability of the results.
In the case above described, a large amount of sets formed
in each company practically impairs the manipulation of these
data. In Brazil, there are 64 distribution companies and approximately 6000 sets of consuming units, which constitute a considerably large database to be analyzed.
The combination of these two techniques dynamic cluster
analysis and data envelopment analysis has proven to be fairly
robust, and it is able to minimize the information asymmetry
effect between the involved agents in the definition of quality
goals. Furthermore, it is relevant to observe that the final result
cannot be taken as an absolute truth. The goals attained must be
seen as guiding values.
It is important to mention that the suggested methodology significantly reduces the degree of subjectivity of the regulator in
its mission to establish performance standards for distribution
companies. This fact makes this kind of regulation better accepted by the agents, for it comes from a methodic and objective
process, which is also reproducible and fair.
The proposed technique regarding the establishment of
quality goals is under consideration by the Brazilian Regulator,
ANEEL, as an advance in the current methodology.

1153

[7] C. F. Chien, F. Y. Lo, and J. T. Lin, Using DEA to measure the relative efficiency of the service center and improve operation efficiency
through reorganization, IEEE Trans. Power Syst., vol. 18, no. 1, pp.
366373, Feb. 2003.
[8] V. Pina and L. Torres, Analysis of efficiency government services delivered: an application to urban public transport, in Transportation Research, Part A: Policy and Practice. New York: Elsevier, 2001, vol.
35, pp. 929944.
[9] A. Pahwa, X. Feng, and D. Lubkeman, Performance evaluation of
electric distribution utilities based on data envelopment analysis, IEEE
Trans. Power Syst., vol. 18, no. 1, pp. 400405, Feb. 2003.
[10] R. Sanhueza, H. Rudnick, and H. Lagunas, DEA efficiency for the
determination of electric power distribution added value, IEEE Trans.
Power Syst., vol. 19, no. 2, pp. 919925, May 2004.
[11] A. Charnes, W. W. Cooper, A. Lewin, and L. M. Seiford, Data Envelopment Analysis: Theory, Methodology, and Application. Norwell,
MA: Kluwer, 1994.
[12] J. E. P. S. Tanure, Methodology and procedure to establish DEC and
FEC targets to distribution companies using yardstick regulation, (in
Portuguese) Ph.D. dissertation, Univ. So Paulo, So Paulo, Brazil,
Nov. 2004.
J. E. Pinheiro dos Santos Tanure (M00) received the B.Sc. degree from the
Federal University of Bahia, Salvador, Brazil, in 1980, the M.Sc. degree from
the Federal University of Itajub, Itajub, Brazil, in 2004, and the D.Sc. degree
from the University of So Paulo, So Paulo, Brazil, in 2004.
He was with Companhia de Eletricidade do Estado da BahiaCOELBA, the
distribution company at the State of Bahia. From 1998 to 2002, he was with
ANEEL, the Brazilian National Regulatory Agency, as a Superintendent of Distribution Service Regulation. In 2003, he was also with the Ministry of Mine and
Energy as a member of the group that elaborated the New Brazilian Electricity
Model. He is now an Associate Professor at University of Salvador, Salvador,
Brazil.

ACKNOWLEDGMENT
The authors would like to thank ANEEL for all the data provided for this study.
REFERENCES
[1] R. Billinton and R. N. Allan, Reliability Evaluation of Power Systems. New York: Pitman, 1984.
[2] J. W. Marangon Lima and J. E. S. Tanure, Quality of electric supply:
incentives and penalties, presented at the Proc. Budapest Power Tech,
Budapest, Hungary, October 1999, paper BPT99-037-24, unpublished.
[3] ANEEL (200), ANEEL Resolution 24. [Online]. Available:
http://www. aneel.gov.br.
[4] J. W. Marangon Lima, J. C. C. Noronha, H. Arango, and P. P. E.
Santos, Distribution pricing based on yardstick regulation, IEEE
Trans. Power Syst., vol. 17, no. 1, pp. 198204, Feb. 2002.
[5] D. Grigoras, R. McInernya, and C. Mulcahy, MAISthe mobile
agents information system support for creating dynamic clusters,
Proc. IEEE 5th Int. Conf. Algorithms Architectures Parallel Processing, 2002.
[6] A. Charnes, W. W. Cooper, and E. Rhodes, Measuring the efficiency
of decision making units, Eur. J. Oper. Res., vol. 2, no. 6, pp. 429444,
1978.

Carlos Mrcio Vieira Tahan received the B.Sc., M.Sc., and D.Sc. degrees from
the University of So Paulo, So Paulo, Brazil, in 1971, 1979, and 1991, respectively.
From 1971 to 1992, he was with Themag Engenharia, where he developed
studies on transmission and distribution. In 2000 to 2003, he was with the Public
Services Commission of So Paulo State as a Commissioner. He has been a
Lecturer at the University of So Paulo since 1989.

J. W. Marangon Lima (SM06) received the B.Sc. degree from the Military
Institute of Engineering, Rio de Janeiro, Brazil, in 1979, the M.Sc. degree from
the Federal University of Itajub, Itajub, Brazil, in 1991, and the D.Sc. degree
from the Federal University of Rio de Janeiro in 1994.
From 1980 to 1993, he was with Eletrobrs, the Brazilian holding company
for the power sector. Since 1993, he has been with the Federal University of
Itajub as a Professor of electrical engineering. In 1998 to 1999, he was also
with ANEEL, the Brazilian National Regulatory Agency, as a Director Advisor.
In 2003, he was also with the Ministry of Mine and Energy as a member of the
group that elaborated the New Brazilian Electricity Model. He is currently in
his sabbatical year in the Operations Research Department, University of Texas
at Austin.