Liberalising the distribution network

When utilities are regulated as vertically integrated monopolies that generate, transmit, distribute and sell power to consumers in their franchise area, these activities are not separated and often the cost items associated with different types of activity are not clearly distinguished. Therefore, the rate charged covers all the utility’s costs as a whole. After restructuring […]

Why is regulation necessary?

Regulation should aim to steer an industry’s performance towards improving ‘general welfare’, i.e. the collective benefit gained by consumers and operators. An industry’s performance can be measured in terms of: Consumer surplus Service availability Profitability and affordability The range of services offered The quality and degree of innovation Consumer Protection Regulation seeks to protect consumers from […]

The Many Phases of Generation

Electricity generation can be divided into different stages based on periods of time. These range from investment decisions made several years before plants are built, to real-time decisions on which the unit must respond to an immediate change in demand. The regulatory framework identifies the decision-maker for each case. This is one of the key […]

Regulatory issues for transmission and distribution grids

Transmission Grid Design The transmission grid (which operates at very high voltage) is designed to offset the deficits and surpluses between generation and demand in different areas of a country, or between neighbouring countries, and paves the way for establishing national or even international markets. This ensures that the most efficient generation is dispatched, globally […]

Regulatory Tools

Regulators may choose from a number of regulatory tools in order to achieve efficiency objectives. The most important of these approaches is the regulation of the revenue from electricity sales that each company is allowed to earn. The revenue must be sufficient to enable the utility company to cover its operating costs and make any […]