There are various methods for assessing the efficiency of regulated companies, including non-parametric and parametric approaches. Non-parametric methods like data envelopment analysis (DEA) establish an efficiency frontier based on best performing peers, while parametric methods like stochastic frontier analysis (SFA) incorporate random errors. Regulators apply benchmarking to set incentives for efficient performance and limit excessive pricing, but must consider the limitations of different methods given data quality and model specification issues. Integration of efficiency results into price controls also requires acknowledging imperfections and regulatory period specifics.