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Issues and Options in the Economic Regulation of European Network Security

Tooraj Jamasb and Rabindra Nepal ()

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

Abstract: Incentive regulation needs to adapt to the emerging changes in the operating environment of the electricity networks and take into account the security of these. This paper assesses the current issues and options in economic regulation of network security across the European electricity systems. An output oriented incentive regulatory approach combines the efficiency promoting mechanisms in a revenue cap framework with output based incentives such as better provision of network security. Thus, incentive regulation is destined to move from pursuing the optimal to being more practical. The RIIO regulatory framework in the UK and the service quality regulation in Italy provide good examples of application of output-based regulation. We also propose an output-based approach for regulation of network security, which accounts for the risks from natural, accidental and malicious threats. We conclude that regulation for network security may also involve looking beyond economic network regulation and focus on the wider security policy and regulation interface considering the risks facing the electricity networks.

Keywords: network security; exceptional events; incentive regulation; output-based (search for similar items in EconPapers)
JEL-codes: L51 L94 L98 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene, nep-eur, nep-ind, nep-net and nep-reg
Date: 2014-08-04
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http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1425.pdf

Related works:
Journal Article: Issues and Options in the Economic Regulation of European Network Security (2015)
Working Paper: Issues and Options in the Economic Regulation of European Network Security (2014) Downloads
Working Paper: Issues and Options in the Economic Regulation of European Network Security (2014) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1425

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