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Cap prices or cap revenues? The dilemma of electric utility networks

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  • Campbell, Alrick

Abstract

In this paper I analyse the behaviour of a monopoly electricity provider that serves three distinct markets under a price cap or revenue cap plan. I make comparisons in terms of their effects on price setting, energy conservation, and social welfare.

Suggested Citation

  • Campbell, Alrick, 2018. "Cap prices or cap revenues? The dilemma of electric utility networks," Energy Economics, Elsevier, vol. 74(C), pages 802-812.
    • Handle: RePEc:eee:eneeco:v:74:y:2018:i:c:p:802-812
    DOI: 10.1016/j.eneco.2018.07.029
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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. Sappington, David E.M., 2024. "Optimal revenue adjustment in the presence of exogenous demand variation," Energy Economics, Elsevier, vol. 131(C).
    3. Milstein, Irena & Tishler, Asher, 2019. "On the effects of capacity payments in competitive electricity markets: Capacity adequacy, price cap, and reliability," Energy Policy, Elsevier, vol. 129(C), pages 370-385.
    4. Xie, Li & Kong, Chun, 2024. "Electricity user connection pricing strategy: The incomplete contract theory perspective," Energy Economics, Elsevier, vol. 132(C).
    5. Ovaere, Marten, 2023. "Cost-efficiency and quality regulation of energy network utilities," Energy Economics, Elsevier, vol. 120(C).
    6. Goodell, John W. & Gurdgiev, Constantin & Paltrinieri, Andrea & Piserà, Stefano, 2024. "Do price caps assist monetary authorities to control inflation? Examining the impact of the natural gas price cap on TTF spikes," Energy Economics, Elsevier, vol. 131(C).
    7. Zhang, Xinhua & Gan, Dongmei & Wang, Yali & Liu, Yu & Ge, Jiali & Xie, Rui, 2020. "The impact of price and revenue floors on carbon emission reduction investment by coal-fired power plants," Technological Forecasting and Social Change, Elsevier, vol. 154(C).
    8. Nepal, Rabindra & Sofe, Ronald, 2024. "Electricity reforms in small Island developing states under changing policy contexts – Lessons for Papua New Guinea," Energy Policy, Elsevier, vol. 186(C).
    9. Jorge Armando Bedoya-Cadavid & Ángela María Lanzas-Duque & Harold Salazar, 2023. "WACC for Electric Power Transmission System Operators: The Case of Colombia," Energies, MDPI, vol. 16(2), pages 1-13, January.
    10. Ryan P. Scott & Tyler A. Scott & Robert A. Greer, 2022. "Who owns the pipes? Utility ownership, infrastructure conditions, and methane emissions in United States natural gas distribution," Review of Policy Research, Policy Studies Organization, vol. 39(2), pages 170-198, March.

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    More about this item

    Keywords

    Electricity; Price cap; Ramsey; Revenue cap; Welfare;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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