Regulation and Electricity Tariff Setting

Summary

This training course explores the principles underlying economic regulation including the regulatory fundamentals, price and quality regulation methods, as well as the routines to set revenue and tariff for regulated services.

Economic regulation is needed in areas where no functional competition is possible. For example, electricity networks constitute a natural monopoly and requires regulation to limit monopoly pricing and to set incentives for efficient performance.

Other activities like generation and supply, which are not natural monopolies, can become de-facto monopolies due to various limitations, and also require regulation. For example, the provision of such services is potentially contestable given the presence of multiple providers in the specific relevant market. However, the competitive provision of such services in response to market demand may be limited due to specific legal requirements, limited market size, limited number of companies or existence of operational constraints.

This training course explores the principles underlying economic regulation including the regulatory fundamentals, price and quality regulation methods, as well as the routines to set revenue and tariff for regulated services. In addition, it describes the role of efficiency analysis and its application in regulation.

Learning Goals

• understand the regulatory fundamentals and obtain an enhanced understanding of the price regulation methods
• become familiar with the technical details used in the regulatory revenue settings, cost of capital, efficiency analysis and quality of supply regulation.
• be trained in the area of electricity pricing including servicing the whole electricity industry.

The conceptual part of the training will be supported by comprehensive practical exercises throughout the course.

Prerequisites

• None
• This course serves as a primer for several learning series to prepare trainees for more in-depth follow-on courses.

Learning Method

• Insightful presentations
• Review of real-world case studies
• Practical examples

Course Content

• Regulatory fundamentals (areas, scope & methods)
• Determination of the allowed revenue
• Cost of capital
• Efficiency analysis
• Quality of supply regulation
• Electricity pricing

Each module is accompanied by examples and practical exercises.

Location
Remote-Training