On Distributive Effects of Optimal Regulation for Power Grid Expansion

Luis Ángel Herrera and Juan Rosellon

No 1327, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: To date, the distributive implications of incentive regulation on electricity transmission networks have not been explicitly studied in the literature. More specifically, the parameters that a regulator might use to achieve distributive efficiency under price-cap regulation have not yet been identified. To discern these parameters is the motivation for the research presented in this paper. We study how different weight parameters affect the distributive characteristics of optimal price-cap incentive regulation for electricity transmission. We find that a regulator's use of ideal (Laspeyres) weights tends to be more beneficial for the Transco (consumers) than for consumers (the Transco).

Keywords: Electricity transmission; incentive regulation; distributive efficiency (search for similar items in EconPapers)
JEL-codes: L50 L51 L94 Q40 Q42 (search for similar items in EconPapers)
Pages: 34 p.
Date: 2013
New Economics Papers: this item is included in nep-reg
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Related works:
Journal Article: On distributive effects of optimal regulation for power grid expansion (2014)
Working Paper: On Distributive Effects of Optimal Regulation for Power Grid Expansion (2013)
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