Can Simple Regulatory Mechanisms Realistically be used for Electricity Transmission Investment? The Case of H-R-G-V

Ingo Vogelsang

Economics of Energy & Environmental Policy, 2018, vol. Volume 7, issue Number 1

Abstract: While simple regulatory mechanisms in the form of price caps have been implemented with success in the telecommunications sectors of many countries, they are much less used in the electricity sector and if so not as a tool to guide transmission investment. This paper takes one particular mechanism from a very abstract concept to an approach that deserves serious consideration as the regulatory approach for electricity transmission investment. For this purpose, some adjustments of the original mechanism have to be made to take care of the rent extraction issue and to provide fairness among user groups. To the extent that reliability can be assessed and measured in monetary terms, it can also become part of the reward structure of the Transco. Most of the environmental issues associated with transmission investment can best be addressed by environmental rather than electricity regulators. A comparison of the adjusted mechanism with a central planning approach and a stakeholder bargaining approach to transmission investment brings out tradeoffs between the approaches but leads to a favorable assessment of the mechanism for practical applications.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.iaee.org/en/publications/eeeparticle.aspx?id=204 (text/html)
Access to full text is restricted to IAEE members and subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aen:eeepjl:eeep7-1-vogelsang

Ordering information: This journal article can be ordered from
http://www.iaee.org/ ... ons/eeepjournal.aspx

Access Statistics for this article

More articles in Economics of Energy & Environmental Policy from International Association for Energy Economics Contact information at EDIRC.
Bibliographic data for series maintained by David Williams ().