Reference Models and Incentive Regulation of Electricity Distribution Networks: An Evaluation of Sweden’s Network Performance Assessment Model (NPAM)

Tooraj Jamasb and Michael Pollitt

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: The world-wide electricity sector reforms have led to a search for alternative and innovative approaches to regulation to promote efficiency improvement in the natural monopoly electricity networks. A number of countries have used incentive regulation models based on efficiency benchmarking of the electricity network utilities. While most regulators have opted adopted parametric and non-parametric frontier-based methods of benchmarking some have used engineering designed ‘reference firm’ or ‘norm’ models for the purpose. This paper examines the incentive properties and other related aspects of the norm model NPAM used in regulation of distribution networks in Sweden and compares these with those of frontier-based benchmarking methods. We identify a number of important differences between the two approaches to regulation benchmarking that are not readily apparent and discuss their ramifications for the regulatory objectives and process.

Keywords: Electricity; regulation; benchmarking. (search for similar items in EconPapers)
JEL-codes: L51 L94 L97 (search for similar items in EconPapers)
Pages: 24
Date: 2007-09
New Economics Papers: this item is included in nep-eff, nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.electricitypolicy.org.uk/pubs/wp/eprg0718.pdf Working Paper Version (application/pdf)

Related works:
Journal Article: Reference models and incentive regulation of electricity distribution networks: An evaluation of Sweden's Network Performance Assessment Model (NPAM) (2008)
Working Paper: Reference Models and Incentive Regulation of Electricity Distribution Networks: An Evaluation of Sweden's Network Performance Assessment Model (NPAM) (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0747

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