Ageing infrastructure investment: 'wall of wire' or 'wall of confusion'? What are the issues and what do they tell us?

Margaret Beardow and Eli Grace-Webb

No 19099, Working Paper Series from Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation

Abstract: When network regulation was introduced in New Zealand the implications for investment on ageing assets went largely unrecognised. Consequently even though wide-ranging power outages have signalled the need for substantial replacement investment in infrastructure there is no 'replacement investment' model in the regulatory tool kit. Consequently there is an emerging belief that ageing assets are replaced on basis of age - the "Wall of Wire" - but this is not generally the case. This seminar argues that there is no need to re-invent the wheel with age-centric replacement models: robust engineering models for measuring efficient and prudent replacement investment already exist. An outline of a typical probability model will be presented some discussion on its provenance and a likely application in regulatory price setting will be proposed.

Keywords: electricity; networks (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:vuw:vuwcsr:19099

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