Balancing Incentives: The Development and Application of a Regulatory Benchmarking Model

Roar Amundsveen () and Hilde Marit Kvile ()
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Roar Amundsveen: The Norwegian Water Resources and Energy Directorate
Hilde Marit Kvile: The Norwegian Water Resources and Energy Directorate

Chapter Chapter 14 in Productivity and Efficiency Analysis, 2016, pp 233-247 from Springer

Abstract: Abstract The main contribution in this paper is a presentation and discussion of issues that arise in the practical application of a regulatory benchmarking model. We describe the regulatory benchmarking model for electricity distribution companies in Norway, and we focus on how different choices influence different incentives for the companies. These choices cover methodology, modelling assumptions and variables, but also how the benchmarking results are applied in the regulatory model. The benchmarking model is only one part of the regulatory model for setting revenue caps. This discussion shows some of the trade-offs that have to be considered in this process, and sheds some light on why regulators may deviate from optimal text-book solutions.

Keywords: Regulation; Benchmarking; Revenue caps; Incentives; Electricity distribution (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-319-23228-7_14

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DOI: 10.1007/978-3-319-23228-7_14

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