In this paper to assess the environmental efficiency of electric power companies two-stage approach has been used Which means that the first step is to calculate the environmental efficiency score of electric power companies with Slack-Based Measure during the period (2004-2014). Then, the second step various factors effects have been evaluated on environmental efficiency by using Tobit and Ordinary Least Squares models. The result of first step show that environmental performance of the electricity industry has seen a reduction in performance during the period of 2004 to 2006, While environmental performance had a rising trend between 2007 to 2009 and then it has had a considerable reduction in the period 2010-2014 (after the liberalization of energy prices). Finally, in 2004, the average efficiency of the industry is reached to lowest level (0.65). The result of second step show that factors affecting efficiency namely Size and Liberation dummy variables have negative effects but the proportion of electricity produced by the thermal power plants, the proportion of gas used in the fuel, capacity utilization rate and electricity exports have positive effects. The results show that importing electricity doesn’t have any significance effect on the efficiency. In the end, the results of adding a new variable (variable log of per capita GDP) showed that except for the proportion of gas used in the fuel, the explanatory variables has robust coefficient.
