Poudineh, R. and Jamasb, T. (2015) 'A new perspective : investment and efficiency under incentive regulation.', Energy journal., 36 (4). pp. 241-263.
Following the liberalisation of the electricity industry since the early 1990s, many sector regulators have adopted incentive regulation aided by benchmarking and productivity analysis. This approach has often resulted in efficiency and quality of service improvement. However, there remains a growing concern as to whether the utilities invest sufficiently and efficiently in maintaining and modernising their networks. This paper studies the relationship between investments and cost efficiency in the context of incentive regulation with ex-post regulatory treatment of investments using a panel dataset of 129 Norwegian distribution companies from 2004 to 2010. We introduce the concept of "no impact efficiency" as a revenue-neutral efficiency effect of investment under incentive regulation that makes a firm "investment efficient" in cost benchmarking. Also, we estimate the observed efficiency effect of investments and compare these with the no impact efficiency. Finally, we discuss the implications of cost benchmarking for investment behaviour of network companies.
|Keywords:||Investments, Cost efficiency, Incentive regulation, Distribution network, No impact efficiency.|
|Full text:||(AM) Accepted Manuscript|
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|Full text:||(VoR) Version of Record|
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|Publisher Web site:||https://doi.org/10.5547/01956574.36.4.rpou|
|Publisher statement:||This article is Gold Open Access and published under CC-BY license terms and conditions.|
|Date accepted:||No date available|
|Date deposited:||25 July 2014|
|Date of first online publication:||October 2015|
|Date first made open access:||No date available|
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