Benchmarking as a management and regulatory instrument for Caribbean electric utilities

Purpose – One of the most pressing questions facing small‐island development states (SIDS) is the appropriate way in which to operate and manage their infrastructure industries. After all SIDS are faced with high cost of infrastructure due to the narrow markets and diseconomies of scale and remoteness. Design/methodology/approach – For small‐island utilities in the Caribbean region, a benchmark has been performed to demonstrate objectively how utilities cost, as well as their service quality, compare over time and with other utilities. About 15 utilities of 17 Caribbean countries were included in the benchmark. Based on these outcomes, the current efficiency and possible efficiency gains were determined (which may differ significantly from the current “best‐practice” of utilities in developed countries) which provide a basis to set targets that are achievable. Findings – In this paper, the conducted Caribbean benchmark studies will be further elaborated and the applicability as management tool and regulatory tool to compare performance within the region will be assessed. One of the preliminary conclusions of the study is that the incentive‐based approaches adopted in many countries do not necessarily work within the context of SIDS (and their specific characteristics and limitations), so that a different regulatory model needs to be developed. Research limitations/implications – The analysis was performed based on data of one year. Analysis based on multi‐year data can provide trends in efficiency and will identify the development of the utilities' performance. Cost data was not used in this analysis due to lack of availability. Also, inclusion of reliability data representing frequency of interruptions and duration of interruption in the analysis would provide a more holistic indication of efficiency. Originality/value – The paper offers insight into the current restructuring of the electricity supply in the Caribbean region.