Electricity Transmission Pricing and Performance-based Regulation
By Ingo Vogelsang. Social Science Research Network, 2006
117 citations recorded by the source corpus.
Performance-based regulation (PBR) is influenced by the Bayesian and non-Bayesian incentive mechanisms. While Bayesian incentives are impractical for direct implementation, the insights from their properties can be combined with practical non-Bayesian mechanisms for application to transmission pricing. This combination suggests an approach based on the distinction between ultra-short, short and long periods. Ultra-short periods are marked by real-time pricing of point-to-point transmission services. Pricing in short periods involves fixed fees and adjustments via price-cap formulas or profit sharing. Productivity-enhancing incentives have to be tempered by long-term commitment considerations, so that profit sharing may dominate pure price caps. Investment incentives require long-term adjustments based on rate-of-return regulation with a “used and useful” criterion.
Subfields: Electrical and Electronic Engineering, Management Science and Operations Research
View Paper: https://www.semanticscholar.org/paper/5ee064f13fd6aa2c6afd1c0c205472a1c7fc6e25
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In Electrical and Electronic Engineering
In Management Science and Operations Research
Citations in the corpus
- Incentive regulation and investment: evidence from European energy utilities (2010, unknown): “…capital may affect investment in a way similar to the X factor, i.e. through a change in the price (while the level 22 This view is consistent with Vogelsang (2006), who studies the relationship between the length of regulatory cycles and investment when performance-based regulation is applied to…”
- Regulatory Markets for AI Safety (2019, background): “Performance-based regulation (also called outcomes-based or principles-based) specifies results (sometime expressed as metrics, sometimes expressed only as principles) that a provider must achieve but does not specify how the provider is to achieve those results (Coglianese et al., 2003; May, 2011).”