On the Role of International Benchmarking of Electricity Transmission System Operators facing significant investment requirements
Electricity networks currently face massive investment requirements. This paper argues that, given the investment requirements, (international) benchmarking is not an adequate tool for the regulation of transmission system operators (TSO). Errors in the outcomes of benchmarking will likely distort network investment and therefore the costs of doing it wrong are high. The paper discusses options to reduce the weight of benchmarking in TSO regulation and options that do not rely on benchmarking at all. Overall, facing massive investment requirements, it seems desirable to switch to a regulatory system with ex-ante investment approval and away from ex-post benchmarking.
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|Date of creation:||Oct 2012|
|Date of revision:|
|Publication status:||Published in Competition and Regulation in Network Industries, 13(1), 2011, 2-23|
|Contact details of provider:|| Web page: http://b-e-r.user.jacobs-university.de/|
References listed on IDEAS
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- AGRELL, Per & BOGETOFT, Peter, 2013. "Benchmarking and regulation," CORE Discussion Papers 2013008, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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- Dieter Helm, 2009. "Infrastructure investment, the cost of capital, and regulation: an assessment," Oxford Review of Economic Policy, Oxford University Press, vol. 25(3), pages 307-326, Autumn.
- M. Mulder, 2012. "Financeability of Investments and Allocation of Costs: an Assessment of the Incentive Regulation of the Dutch High-Voltage Network," Competition and Regulation in Network Industries, Intersentia, vol. 13(2), pages 160-187, June.
- repec:sen:journl:v:13:y:2012:i:2:p:160-187 is not listed on IDEAS
- Grout, Paul A. & Zalewska, Anna, 2006. "The impact of regulation on market risk," Journal of Financial Economics, Elsevier, vol. 80(1), pages 149-184, April.
- Haney, A.B. & Pollitt, M.G., 2012. "International benchmarking of Electricity Transmission by Regulators: Theory and Practice," Cambridge Working Papers in Economics 1254, Faculty of Economics, University of Cambridge.
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