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Economic Regulation of Electricity Distribution Networks

In: Electricity Distribution Networks in the Decentralisation Era

Author

Listed:
  • Rahmatallah Poudineh

    (Oxford Institute for Energy Studies)

  • Christine Brandstätt

    (Oxford Institute for Energy Studies
    Copenhagen Business School)

  • Farhad Billimoria

    (Oxford Institute for Energy Studies
    University of Oxford)

Abstract

Traditionally, the regulation of electricity networks was concerned mainly with revenue sufficiency, cost efficiency, and service quality. However, the transition of the electricity system means that economic regulation needs to align the operation of networks with wider decarbonisation objectives. Economic incentives provided to network firms need to create value for the society by encouraging them to engage in activities that facilitate the whole system optimisation and maximise the value of the network. Strong emphasis on short-run cost efficiency can result in reduction of technological and business model innovation at the network segment. Innovation is not only costly but also risky. This means regulatory frameworks need to consider the level of risk to which network companies are exposed to for their stage of innovation activity.

Suggested Citation

  • Rahmatallah Poudineh & Christine Brandstätt & Farhad Billimoria, 2022. "Economic Regulation of Electricity Distribution Networks," Springer Books, in: Electricity Distribution Networks in the Decentralisation Era, chapter 0, pages 117-131, Springer.
    • Handle: RePEc:spr:sprchp:978-3-030-98069-6_9
    DOI: 10.1007/978-3-030-98069-6_9
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