Economic Regulation of Electricity Distribution Networks

Rahmatallah Poudineh (), Christine Brandstätt () and Farhad Billimoria ()
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Rahmatallah Poudineh: Oxford Institute for Energy Studies
Christine Brandstätt: Oxford Institute for Energy Studies
Farhad Billimoria: Oxford Institute for Energy Studies

Chapter Chapter 9 in Electricity Distribution Networks in the Decentralisation Era, 2022, pp 117-131 from Springer

Abstract: Abstract Traditionally, the regulation of electricity networks was concerned mainly with revenue sufficiency, cost efficiency, and service quality. However, the transition of the electricity system means that economic regulation needs to align the operation of networks with wider decarbonisation objectives. Economic incentives provided to network firms need to create value for the society by encouraging them to engage in activities that facilitate the whole system optimisation and maximise the value of the network. Strong emphasis on short-run cost efficiency can result in reduction of technological and business model innovation at the network segment. Innovation is not only costly but also risky. This means regulatory frameworks need to consider the level of risk to which network companies are exposed to for their stage of innovation activity.

Keywords: Economic regulation; Electricity distribution networks; Incentive regulation; Rate-of-return regulation; RIIO model (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-030-98069-6_9

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DOI: 10.1007/978-3-030-98069-6_9

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