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Exploring the determinants of “best practice” benchmarking in electricity network regulation

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  • Haney, Aoife Brophy
  • Pollitt, Michael G.

Abstract

In this paper we use a best practice index constructed from the survey responses of regulators in 40 countries to explore the determinants of the methods used in electricity network regulation. Drawing from the incentive regulation and institutional economics literature, we construct an empirical model to investigate the impact of industry size, political and economic institutions on the degree of best practice regulation. Our results suggest that the existence and experience of an independent regulator is the most important institutional determinant of best practice regulation. In addition, small numbers of network companies act as a constraint on the use of advanced benchmarking methods. Finally, regional effects are also important. These findings lead us to question whether one “best practice” model is in fact applicable to countries with very different political and economic contexts.

Suggested Citation

  • Haney, Aoife Brophy & Pollitt, Michael G., 2011. "Exploring the determinants of “best practice” benchmarking in electricity network regulation," Energy Policy, Elsevier, vol. 39(12), pages 7739-7746.
    • Handle: RePEc:eee:enepol:v:39:y:2011:i:12:p:7739-7746
    DOI: 10.1016/j.enpol.2011.09.018
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    3. Nepal, Rabindra & Menezes, Flavio & Jamasb, Tooraj, 2014. "Network regulation and regulatory institutional reform: Revisiting the case of Australia," Energy Policy, Elsevier, vol. 73(C), pages 259-268.
    4. Erdogdu, Erkan, 2013. "A cross-country analysis of electricity market reforms: Potential contribution of New Institutional Economics," Energy Economics, Elsevier, vol. 39(C), pages 239-251.
    5. Daraio, Cinzia & Kerstens, Kristiaan & Nepomuceno, Thyago & Sickles, Robin C., 2019. "Empirical Surveys of Frontier Applications: A Meta-Review," Working Papers 19-005, Rice University, Department of Economics.
    6. Waidelich, Paul & Haug, Tomas & Wieshammer, Lorenz, 2022. "German efficiency gone wrong: Unintended incentives arising from the gas TSOs’ benchmarking," Energy Policy, Elsevier, vol. 160(C).
    7. Janda, Karel & Krska, Stepan, 2014. "Benchmarking Methods in the Regulation of Electricity Distribution System Operators," MPRA Paper 59442, University Library of Munich, Germany.
    8. Haney, Aoife Brophy & Pollitt, Michael G., 2013. "International benchmarking of electricity transmission by regulators: A contrast between theory and practice?," Energy Policy, Elsevier, vol. 62(C), pages 267-281.
    9. Saastamoinen, Antti & Kuosmanen, Timo, 2016. "Quality frontier of electricity distribution: Supply security, best practices, and underground cabling in Finland," Energy Economics, Elsevier, vol. 53(C), pages 281-292.
    10. Gore, Christopher D. & Brass, Jennifer N. & Baldwin, Elizabeth & MacLean, Lauren M., 2019. "Political autonomy and resistance in electricity sector liberalization in Africa," World Development, Elsevier, vol. 120(C), pages 193-209.
    11. Subal C. Kumbhakar & Gudbrand Lien, 2017. "Yardstick Regulation of Electricity Distribution Disentangling Short-run and Long-run Inefficiencies," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
    12. Erdogdu, Erkan, 2013. "Essays on Electricity Market Reforms: A Cross-Country Applied Approach," MPRA Paper 47139, University Library of Munich, Germany.

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