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Regulation of Network Charges

In: Handbook Utility Management

Author

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  • Gert Brunekreeft

    (Jacobs University Bremen and Director of the Bremer Energie Institut)

Abstract

This chapter indicates that we seem at present to be facing a paradigm shift in network regulation, from pure price-based approaches to hybrid models with cost-based elements. The driver behind this move is the need for adequate network investment. Price-based approaches, such as price or revenue caps, designed to increase incentives for short-run efficiency improvements, are successful. However, it appears that when timely and adequate long-run investment is the policy aim (which is not the same as efficient investment), cost-based approaches are more effective than price-based regulation. One of the more prominent examples of a sophisticated hybrid form is the introduction of an 'incentive mechanism’ with a menu of sliding scales for the promotion of investment in the electricity distribution networks in the UK in 2005. This appears to be a promising way forward.

Suggested Citation

  • Gert Brunekreeft, 2008. "Regulation of Network Charges," Springer Books, in: Andreas Bausch & Burkhard Schwenker (ed.), Handbook Utility Management, chapter 26, pages 435-456, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-79349-6_26
    DOI: 10.1007/978-3-540-79349-6_26
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    Cited by:

    1. Evangelinos, Christos, 2013. "Infrastrukturpreise: Eine normativ-theoretische Analyse," Discussion Papers 1/2013, Technische Universität Dresden, "Friedrich List" Faculty of Transport and Traffic Sciences, Institute of Transport and Economics.

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    Keywords

    monopoly; network; regulation;
    All these keywords.

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