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Incentive Regulation and Utility Benchmarking for Electricity Network Security

Author

Listed:
  • Tooraj Jamasb

    (Durham University Business School, Durham)

  • Rabindra Nepal

    (School of Economics, University of Queensland, Australia)

Abstract

The incentive regulation of costs related to physical and cyber security in electricity networks is an important but relatively unexplored and ambiguous issue. These costs can be part of cost efficiency benchmarking or, alternatively, dealt with separately. This paper discusses the issues and proposes options for incorporating network security costs within incentive regulation in a benchmarking framework. The relevant concerns and limitations associated with the accounting and classification of network security costs, choice of cost drivers, data adequacy and quality and the relevant benchmarking methodologies are discussed. The analysis suggests that the present regulatory treatment of network security costs using benchmarking is limited to being an informative regulatory tool rather than being deterministic. We discuss how alternative approaches outside the benchmarking framework, such as the use of stochastic cost-benefit analysis and cost-effectiveness analysis of network security investments can complement the results obtained from benchmarking.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Tooraj Jamasb & Rabindra Nepal, 2014. "Incentive Regulation and Utility Benchmarking for Electricity Network Security," Working Papers EPRG 1413, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg1413
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    Cited by:

    1. is not listed on IDEAS
    2. Pavala Malar Kannan & Govindan Marthandan & Rathimala Kannan, 2021. "Modelling Efficiency of Electric Utilities Using Three Stage Virtual Frontier Data Envelopment Analysis with Variable Selection by Loads Method," Energies, MDPI, vol. 14(12), pages 1-21, June.
    3. Yuan, Peng & Pu, Yuran & Liu, Chang, 2021. "Improving electricity supply reliability in China: Cost and incentive regulation," Energy, Elsevier, vol. 237(C).
    4. Yang, Bo & Cui, Ya, 2025. "Can the energy consumption rights trading system enhance energy resilience?–A synergistic perspective of green finance and financial technology," Energy, Elsevier, vol. 322(C).
    5. Nepal, Rabindra & Zhao, Xiaomeng & Liu, Yang & Dong, Kangyin, 2024. "Can green finance strengthen energy resilience? The case of China," Technological Forecasting and Social Change, Elsevier, vol. 202(C).
    6. Lavarenne, Jean & Shwageraus, Eugene & Weightman, Michael, 2016. "Accountability feedback assessments for improving efficiency of nuclear regulatory institutions," Energy Policy, Elsevier, vol. 96(C), pages 274-288.
    7. Shi, Yarong & Yang, Bo, 2025. "China's energy system building toward an era of resilience: How green fintech can empower?," International Review of Economics & Finance, Elsevier, vol. 98(C).

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    Keywords

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    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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