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The effects of average norm model regulation: The case of electricity distribution in Sweden

Author

Listed:
  • Tooraj - Jamasb

    (Faculty of Economics - CAM - University of Cambridge [Cambridge, UK], School of Management and Languages - HWU - Heriot-Watt University [Edinburgh])

  • Magnus Söderberg

    (CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

Abstract

Following the reform of energy sectors, some countries have used engineering norm models in incentive regulation of network utilities. In 2003, Sweden adopted this approach to regulation of electricity distribution networks. This paper examines whether the norm models represent the real networks and create incentives for performance improvement. We analyse data from 138 network concession holders between 2000 and 2007. The results show that norm models are not adequate representations of real networks. Also, utilities that perform better than their norm models tend to behave opportunistically. Finally, we find that private utilities respond more strongly to incentives.

Suggested Citation

  • Tooraj - Jamasb & Magnus Söderberg, 2010. "The effects of average norm model regulation: The case of electricity distribution in Sweden," Post-Print hal-00841952, HAL.
    • Handle: RePEc:hal:journl:hal-00841952
    DOI: 10.1007/s11151-010-9246-8
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    Cited by:

    1. Söderberg, Magnus & Vesterberg, Mattias, 2023. "How demand uncertainty influences electricity network prices under revenue-cap regulation: The case of Sweden," Energy Economics, Elsevier, vol. 127(PB).
    2. Joel Seppälä & Pertti Järventausta, 2024. "Analyzing Supply Reliability Incentive in Pricing Regulation of Electricity Distribution Operators," Energies, MDPI, vol. 17(6), pages 1-17, March.
    3. Meade, Richard & Söderberg, Magnus, 2020. "Is welfare higher when utilities are owned by customers instead of investors? Evidence from electricity distribution in New Zealand," Energy Economics, Elsevier, vol. 86(C).
    4. Agrell, Per J. & Brea-Solís, Humberto, 2017. "Capturing heterogeneity in electricity distribution operations: A critical review of latent class modelling," Energy Policy, Elsevier, vol. 104(C), pages 361-372.
    5. Darryl Biggar & Matthieu Glachant & Magnus Söderberg, 2018. "Monopoly regulation when customers need to make sunk investments: evidence from the Swedish district heating sector," Journal of Regulatory Economics, Springer, vol. 54(1), pages 14-40, August.
    6. Ovaere, Marten, 2023. "Cost-efficiency and quality regulation of energy network utilities," Energy Economics, Elsevier, vol. 120(C).
    7. Tahvanainen, Kaisa & Honkapuro, Samuli & Partanen, Jarmo & Viljainen, Satu, 2012. "Experiences of modern rate of return regulation in Finland," Utilities Policy, Elsevier, vol. 21(C), pages 32-39.
    8. Richard Meade & Magnus Soderberg, 2017. "Welfare-Maximising Investors? – Utility Firm Performance with Heterogeneous Quality Preferences and Endogenous Ownership," Working Papers 2017-09, Auckland University of Technology, Department of Economics.
    9. Månsson, Kristofer & Qasim, Muhammad & Söderberg, Magnus, 2025. "Are CEOs judged on how cost efficient their firms are?," Energy Economics, Elsevier, vol. 143(C).
    10. Russell Smyth & Magnus Söderberg, 2010. "Public interest versus regulatory capture in the Swedish electricity market," Journal of Regulatory Economics, Springer, vol. 38(3), pages 292-312, December.
    11. Nepal, Rabindra & Jamasb, Tooraj, 2015. "Incentive regulation and utility benchmarking for electricity network security," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 117-127.
    12. Luis Orea & Tooraj Jamasb, 2017. "Regulating Heterogeneous Utilities: A New Latent Class Approach with Application to the Norwegian Electricity Distribution Networks," The Energy Journal, , vol. 38(4), pages 101-127, July.
    13. Deng, Na-Qian & Liu, Li-Qiu & Deng, Ying-Zhi, 2018. "Estimating the effects of restructuring on the technical and service-quality efficiency of electricity companies in China," Utilities Policy, Elsevier, vol. 50(C), pages 91-100.
    14. Erik Lundin, 2020. "Effects of Privatization on Price and Labor Efficiency: The Swedish Electricity Distribution Sector," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 247-274.
    15. Biggar, Darryl & Söderberg, Magnus, 2020. "Empirical analysis of how political ideology and ownership influence price stability in the Swedish district heating market," Energy Policy, Elsevier, vol. 145(C).
    16. Bovera, Filippo & Delfanti, Maurizio & Fumagalli, Elena & Lo Schiavo, Luca & Vailati, Riccardo, 2021. "Regulating electricity distribution networks under technological and demand uncertainty," Energy Policy, Elsevier, vol. 149(C).
    17. Magnus Söderberg & Mattias Vesterberg, 2025. "Scale properties and efficient network structures in the Swedish electricity distribution market," Journal of Regulatory Economics, Springer, vol. 68(1), pages 17-37, August.

    More about this item

    Keywords

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    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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