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The experience of Italy and the US with exceptional regulatory incentives for exceptional electricity transmission investments

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Listed:
  • Nico Keyaerts
  • Leonardo Meeus

Abstract

There is a trend in regulatory practice towards exceptional incentives for exceptional investments. Italy and the US have the longest experience with a regulatory framework for strategically important investments that deviates from the default framework. In these countries, the incentives provided to the project promoter are based on a case-by-case assessment of the project. Policy makers and regulatory authorities in countries that are considering setting up such a framework can learn from these experiences. In this paper, we therefore analyze them in detail. We find that the Italian scheme is simpler, which reduces the administration costs. The US scheme is more advanced in the case-by-case assessment of the requested incentives. However, both schemes have evolved, each becoming more sophisticated and complex. Countries that are considering the introduction of exceptional regulatory incentives for exceptional electricity transmission investments should note that this is a process that will require fine-tuning).

Suggested Citation

  • Nico Keyaerts & Leonardo Meeus, 2015. "The experience of Italy and the US with exceptional regulatory incentives for exceptional electricity transmission investments," RSCAS Working Papers 2015/44, European University Institute.
  • Handle: RePEc:rsc:rsceui:2015/44
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    References listed on IDEAS

    as
    1. Henriot, Arthur, 2013. "Financing investment in the European electricity transmission network: Consequences on long-term sustainability of the TSOs financial structure," Energy Policy, Elsevier, vol. 62(C), pages 821-829.
    2. 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.
    3. repec:sen:journl:v:13:y:2012:i:2:p:160-187 is not listed on IDEAS
    4. Leonardo Meeus, 2014. "Offshore grids for renewables: do we need a particular regulatory framework?," RSCAS Working Papers 2014/24, European University Institute.
    5. Jamasb, T. & Pollitt, M., 2000. "Benchmarking and regulation: international electricity experience," Utilities Policy, Elsevier, vol. 9(3), pages 107-130, September.
    6. Snarr, Steven W., 2010. "FERC Rate Incentives for Transmission Infrastructure Development," The Electricity Journal, Elsevier, vol. 23(2), pages 6-17, March.
    7. repec:sen:journl:v:14:i:1:y:2013:p:22 is not listed on IDEAS
    8. G. Brunekreeft, 2013. "On The Role of International Benchmarking of Electricity Transmission System Operators Facing Significant Investment Requirements," Competition and Regulation in Network Industries, Intersentia, vol. 14(1), pages 2-24, March.
    9. Benjamin, Richard, 2007. "Principles for Interregional Transmission Expansion," The Electricity Journal, Elsevier, vol. 20(8), pages 36-47, October.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    Electricity Transmission; Transmission grid; Interconnection; Incentive Regulation;

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