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The Role of Benchmarking in Incentive Regulation: Lessons from Electricity Distribution

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  • Pollitt, M. G.

Abstract

This paper discusses the use of electricity distribution benchmarking within incentive regulation as part of price control reviews. It compares different methods, with an emphasis on efficiency benchmarking. We consider the choices facing the regulator in selecting a benchmarking method and in implementing it and how these may evolve over time. We contrast the experiences of regulators in Great Britain, the Netherlands and Germany in doing benchmarking within price control reviews and offer some lessons for the future. We suggest that benchmarking should be expected to evolve over time and that regulators should consider a 'benchmarking of benchmarking' with respect to their currently preferred benchmarking methods.

Suggested Citation

  • Pollitt, M. G., 2026. "The Role of Benchmarking in Incentive Regulation: Lessons from Electricity Distribution," Cambridge Working Papers in Economics 2647, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2647
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    References listed on IDEAS

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    1. Joskow, Paul L, 1974. "Inflation and Environmental Concern: Structural Change in the Process of Public Utility Price Regulation," Journal of Law and Economics, University of Chicago Press, vol. 17(2), pages 291-327, October.
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    1. Paul H. L. Nillesen & Michael G. Pollitt, 2026. "Incentive regulation and distribution network performance: a Dutch case study (2000–2024)," Journal of Regulatory Economics, Springer, vol. 69(1), pages 1-26, December.

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    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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