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Incentive Regulation of Electricity and Gas Networks in the UK: From RIIO-1 to RIIO-2

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  • Tooraj Jamasb

Abstract

The regulatory and operating context of energy networks is dynamic and constantly evolving. Achieving a multitude of economic, environmental, social and policy objectives is a challenging task for the sector regulators. In 2010, the UK energy regulator Ofgem replaced its approach to energy network price control and incentive regulation with a Revenue-Incentive-Innovation-Output (RIIO-1) model. This paper reviews the incentive areas that influence the performance of the next version of the model (RIIO-2). Guided by the principles of regulatory economics and evidence in the literature, we discuss key aspects and incentive properties of the regulation model under revision by the regulator. The lessons of experience from the RIIO models are also relevant for regulators in other countries and can inform their design of incentive regulation of energy networks.

Suggested Citation

  • Tooraj Jamasb, 2021. "Incentive Regulation of Electricity and Gas Networks in the UK: From RIIO-1 to RIIO-2," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    • Handle: RePEc:aen:eeepjl:eeep10-2-jamasb
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    Cited by:

    1. Bogetoft, Peter & Eskesen, Anita, 2022. "Balancing information rents and service differentiation in utility regulation," Energy Economics, Elsevier, vol. 106(C).

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    JEL classification:

    • F0 - International Economics - - General

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