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Investor response to tariff options under regulation by contract: Evidence from Russian heating concessions

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  • Avdasheva, Svetlana
  • Gimadi, Victoria

Abstract

Governments rarely provide a menu of tariff options for selection by regulated entities. There is a lack of systematic evidence on investor preferences towards different tariff setting. We use a dataset of concessions tenders in Russian heating during the 2014–2015 period to test hypotheses about the preferences of investors towards different tariff combinations. We found that long-term tariffs increase the attractiveness of a concession. While an increase in the price cap does not attract investors, an increase in the rate of return does. Investors make a choice in favor of tariffs with low-powered incentives.

Suggested Citation

  • Avdasheva, Svetlana & Gimadi, Victoria, 2019. "Investor response to tariff options under regulation by contract: Evidence from Russian heating concessions," Utilities Policy, Elsevier, vol. 57(C), pages 67-74.
    • Handle: RePEc:eee:juipol:v:57:y:2019:i:c:p:67-74
    DOI: 10.1016/j.jup.2019.02.004
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    Keywords

    Tariffs; Heating; Concession;
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