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Long-term Framework for Electricity Distribution Access Charges

Tooraj Jamasb (), Karsten Neuhoff (), David M Newbery () and Michael Pollitt ()

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

Abstract: In order to achieve overall economic efficiency, incentive regulation of electricity distribution utilities must address two important and inter-related issues. First, the utilities’ allowed revenues need to be set at correct levels. Second, the access charging mechanism by which the utilities recover the allowed revenues must give the correct economic signals to generation and load connected to the network. This paper is concerned with the latter aspect of regulation. The paper discusses the main economic principles that should form the basis on which a distribution access charging model is developed. The charging model should have a number of attributes: be calibrated to each existing network; contain an asset register; be able to determine assets needed to meet new demand; find least-cost system expansion; compute network losses and handle ancillary services; estimate incremental operating and maintenance costs; be available to users; and be simple enough for external users to understand.

Keywords: Electricity; network regulation; access charges; distributed generation (search for similar items in EconPapers)
JEL-codes: L43 L51 L94 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ene, nep-mic, nep-net and nep-reg
Date: 2005-11
Note: EPRG, IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed

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