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Measuring the price impact of price-cap regulation among Canadian electricity distribution utilities

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  • Crowley, Nick
  • Meitzen, Mark

Abstract

Price-cap regulation is a form of performance-based ratemaking that offers electric distribution utilities a fundamental alternative to traditional rate-of-return regulation. Economic theory suggests that price caps, which set annual rate changes based on industry-wide productivity, should incentivize improved performance within the regulated utility. This analysis tests that theory by comparing rate outcomes among a control group of firms regulated under the traditional rate-of-return method against rate outcomes under price caps in Alberta and Ontario across time. The findings suggest a downward effect on the annual escalation of customer rates under price-cap regulation.

Suggested Citation

  • Crowley, Nick & Meitzen, Mark, 2021. "Measuring the price impact of price-cap regulation among Canadian electricity distribution utilities," Utilities Policy, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:juipol:v:72:y:2021:i:c:s0957178721001090
    DOI: 10.1016/j.jup.2021.101275
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    References listed on IDEAS

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    1. W. Kip Viscusi & Joseph E. Harrington & John M. Vernon, 2005. "Economics of Regulation and Antitrust, 4th Edition," MIT Press Books, The MIT Press, edition 4, volume 1, number 026222075x, December.
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    Cited by:

    1. Dennis L. Weisman, 2023. "Measuring the Power of Regulatory Regimes," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(1), pages 19-32, February.

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