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Multi-Period Dea Incentive Regulation in Electricity Distribution

Author

Listed:
  • Per J. Agrell
  • Peter Bogetoft

    (The Royal Veterinary and Agricultural University, Denmark)

  • Jørgen Tind

Abstract

Multi-period multi-product regulatory schemes for electricity distributors are presented, based on cost information from a productivity analysis model and an agency theoretical decision model. The proposed schemes are operational and demonstrate considerable advantages compared to the popular CPI-X revenue cap regulation. The schemes avoid arbitrariness, too high or negative informational rents as well as ratchet effects and they promote rapid productivity catch-up by making full use of available data. More generally, the paper contributes to the theoretical unification between firm-based Data Envelopment Analysis (DEA) productivity models and micro-economic reimbursement theories.

Suggested Citation

  • Per J. Agrell & Peter Bogetoft & Jørgen Tind, 2000. "Multi-Period Dea Incentive Regulation in Electricity Distribution," CIE Discussion Papers 2000-13, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
  • Handle: RePEc:kud:kuieci:2000-13
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    File URL: http://www.econ.ku.dk/cie/dp/dp_2000-2002/2000-13.pdf/
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    References listed on IDEAS

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    1. Xavier Freixas & Roger Guesnerie & Jean Tirole, 1985. "Planning under Incomplete Information and the Ratchet Effect," Review of Economic Studies, Oxford University Press, vol. 52(2), pages 173-191.
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    Cited by:

    1. Munksgaard, Jesper & Pade, Lise-Lotte & Fristrup, Peter, 2005. "Efficiency gains in Danish district heating. Is there anything to learn from benchmarking?," Energy Policy, Elsevier, vol. 33(15), pages 1986-1997, October.
    2. Antonio Estache & Sergio Perelman & Lourdes Trujillo, 2006. "Infrastructure Reform in Developing Economies: Evidence from a survey of efficiency measures," ULB Institutional Repository 2013/44062, ULB -- Universite Libre de Bruxelles.
    3. repec:ipn:libros:006 is not listed on IDEAS
    4. Jamasb, T. & Mota, R. & Newbery, D. & Pollitt, M., 2004. "‘Electricity Sector Reform in Developing Countries: A Survey of Empirical Evidence on Determinants and Performance’," Cambridge Working Papers in Economics 0439, Faculty of Economics, University of Cambridge.
    5. Tim Coelli & Denis Lawrence (ed.), 2006. "Performance Measurement and Regulation of Network Utilities," Books, Edward Elgar Publishing, number 3801.

    More about this item

    Keywords

    Regulation; Efficiency analysis; Incentive systems;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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