Benchmarking and Regulation of Electricity Transmission and Distribution Utilities: Lessons from International Experience

Tooraj Jamasb and Michael Pollitt

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Since the early 1980’s, many countries have implemented electricity sector reform, many of which have bundled generation, transmission, distribution and supply activities, and have introduced competition in generation and supply. An increasing number of countries are also adopting incentive regulation to promote efficiency improvement in the natural monopoly activities - transmission and distribution. Incentive regulation almost invariably involves benchmarking or comparison of actual vs. some reference performance. This paper reviews the main approaches to incentive regulation and discusses various benchmarking methods. We also present the finding of a survey of the use of benchmarking methods in the OECD and few other countries. Our survey finds a variety of methods used by the electricity regulators although with a notable preference for the non-parametric methods. We then draw conclusions based on the finding of the survey highlighting the main outstanding issues and lessons for best practice implementation of benchmarking in electricity regulation.

Keywords: electricity; benchmarking; incentive regulation; data envelopment analysis; stochastic frontier analysis (search for similar items in EconPapers)
JEL-codes: L43 L51 L94 (search for similar items in EconPapers)
Pages: 34
Date: 2001-01
New Economics Papers: this item is included in nep-ene, nep-ent, nep-lam and nep-net
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0101

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