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Long-term Framework for Electricity Distribution Access Charges

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Author Info

  • Jamasb, T.
  • Neuhoff, K.
  • Newbery, D.
  • Pollitt, M.

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.

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Bibliographic Info

Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0551.

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Length: 67
Date of creation: Nov 2005
Date of revision:
Handle: RePEc:cam:camdae:0551

Note: EPRG, IO
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Web page: http://www.econ.cam.ac.uk/index.htm

Related research

Keywords: Electricity; network regulation; access charges; distributed generation;

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References

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  1. M. Pollitt, 2004. "Electricity reform in Chile. Lessons for developing countries," Competition and Regulation in Network Industries, Intersentia, vol. 5(3), pages 221-263, September.
  2. Filippini, Massimo & Wild, Jorg, 2001. "Regional differences in electricity distribution costs and their consequences for yardstick regulation of access prices," Energy Economics, Elsevier, vol. 23(4), pages 477-488, July.
  3. Chi-Keung Woo & Debra Lloyd-Zannetti & Ren Orans & Brian Horii & Grayson Heffner, 1995. "Marginal Capacity Costs of Electricity Distribution and Demand for Distributed Generation," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 111-130.
  4. Brunekreeft, Gert & Neuhoff, Karsten & Newbery, David, 2005. "Electricity transmission: An overview of the current debate," Utilities Policy, Elsevier, vol. 13(2), pages 73-93, June.
  5. Greene, David L. & Patterson, Philip D. & Singh, Margaret & Li, Jia, 2005. "Feebates, rebates and gas-guzzler taxes: a study of incentives for increased fuel economy," Energy Policy, Elsevier, vol. 33(6), pages 757-775, April.
  6. Riechmann, Christoph, 2000. "Strategic pricing of grid access under partial price-caps -- electricity distribution in England and Wales," Energy Economics, Elsevier, vol. 22(2), pages 187-207, April.
  7. A. Yatchew, 2000. "Scale economies in electricity distribution: a semiparametric analysis," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(2), pages 187-210.
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Citations

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Cited by:
  1. Poudineh, Rahmatallah & Jamasb, Tooraj, 2014. "Distributed generation, storage, demand response and energy efficiency as alternatives to grid capacity enhancement," Energy Policy, Elsevier, vol. 67(C), pages 222-231.
  2. Jamasb, Tooraj & Pollitt, Michael, 2008. "Security of supply and regulation of energy networks," Energy Policy, Elsevier, vol. 36(12), pages 4584-4589, December.
  3. Niesten, Eva, 2010. "Network investments and the integration of distributed generation: Regulatory recommendations for the Dutch electricity industry," Energy Policy, Elsevier, vol. 38(8), pages 4355-4362, August.
  4. Jamasb, Tooraj & Pollitt, Michael, 2008. "Reference models and incentive regulation of electricity distribution networks: An evaluation of Sweden's Network Performance Assessment Model (NPAM)," Energy Policy, Elsevier, vol. 36(5), pages 1788-1801, May.
  5. Brandstätt, Christine & Brunekreeft, Gert & Friedrichsen, Nele, 2011. "Locational signals to reduce network investments in smart distribution grids: What works and what not?," Utilities Policy, Elsevier, vol. 19(4), pages 244-254.
  6. van der Welle, Adriaan J. & de Joode, Jeroen, 2011. "Regulatory road maps for the integration of intermittent electricity generation: Methodology development and the case of The Netherlands," Energy Policy, Elsevier, vol. 39(10), pages 5829-5839, October.

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