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Experiences of modern rate of return regulation in Finland

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  • Tahvanainen, Kaisa
  • Honkapuro, Samuli
  • Partanen, Jarmo
  • Viljainen, Satu

Abstract

This article seeks empirical evidence of how the Finnish electricity distribution companies have responded to regulatory incentives in the rate of return regulation. The effects of regulation on company behaviour were studied by a questionnaire and interview survey. After more than ten years of regulation, the results show that the investment, operation and pricing behaviour of companies have been influenced by regulatory incentives, but the future role of regulation is expected to be even greater. Regulatory incentives were recognised by the companies, but the role of other drivers such as customer value was considered strong. Public companies reported stronger response to regulatory incentives.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:juipol:v:21:y:2012:i:c:p:32-39
    DOI: 10.1016/j.jup.2012.01.001
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    References listed on IDEAS

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    Cited by:

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    2. Avdasheva, Svetlana & Orlova, Yulia, 2020. "Effects of long-term tariff regulation on investments under low credibility of rules: Rate-of-return and price cap in Russian electricity grids," Energy Policy, Elsevier, vol. 138(C).
    3. 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.
    4. Collan, Mikael & Savolainen, Jyrki & Lilja, Emma, 2022. "Analyzing the returns and rate of return regulation of Finnish electricity distribution system operators 2015–2019," Energy Policy, Elsevier, vol. 160(C).
    5. Cambini, Carlo & Meletiou, Alexis & Bompard, Ettore & Masera, Marcelo, 2016. "Market and regulatory factors influencing smart-grid investment in Europe: Evidence from pilot projects and implications for reform," Utilities Policy, Elsevier, vol. 40(C), pages 36-47.
    6. Singh, Kewal & Singh, Anoop & Prakash, Puneet, 2022. "Estimating the cost of equity for the regulated energy and infrastructure sectors in India," Utilities Policy, Elsevier, vol. 74(C).

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