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Some Applied Economics of Utility Regulation

Abstract:
This paper seeks to bring to the attention of regulatory economists and policymakers the existence of some approaches to utility regulation that have hitherto received little or no attention in the economics literature. It begins by noting that regulatory actions have discouraged certain kinds of retail contracts in the UK that are offered in Nordic countries, almost extinguished retail competition in Ohio, and distorted the market for merchant interconnectors in Australia. In contrast, Argentina secured an efficient appraisal and implementation of transmission expansions by empowering users and severely limiting the role for regulation. Some US and Canadian jurisdictions have fostered the emergence of negotiated settlements that exhibit considerable innovation, and greater benefits for all parties than would have been possible with the conventional regulatory approach. These examples of the actual regulatory world can inform the work of theorists and policymakers.

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Energy Specializations: Electricity – Markets and Prices ; Electricity – Policy and Regulation

JEL Codes:
D42 - Market Structure, Pricing, and Design: Monopoly
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Electric utilities, Regulation, Electricity market performance

DOI: 10.5547/ISSN0195-6574-EJ-Vol29-NoSI2-4


Published in Volume 29, Special Issue #2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.