Regulation of Network Charges

Gert Brunekreeft
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Gert Brunekreeft: Jacobs University Bremen and Director of the Bremer Energie Institut

Chapter 26 in Handbook Utility Management, 2008, pp 435-456 from Springer

Abstract: Abstract This chapter indicates that we seem at present to be facing a paradigm shift in network regulation, from pure price-based approaches to hybrid models with cost-based elements. The driver behind this move is the need for adequate network investment. Price-based approaches, such as price or revenue caps, designed to increase incentives for short-run efficiency improvements, are successful. However, it appears that when timely and adequate long-run investment is the policy aim (which is not the same as efficient investment), cost-based approaches are more effective than price-based regulation. One of the more prominent examples of a sophisticated hybrid form is the introduction of an 'incentive mechanism’ with a menu of sliding scales for the promotion of investment in the electricity distribution networks in the UK in 2005. This appears to be a promising way forward.

Keywords: monopoly; network; regulation (search for similar items in EconPapers)
Date: 2008
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DOI: 10.1007/978-3-540-79349-6_26

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