Regulatory Benchmarking

Models, Analyses and Applications

Per J. Agrell, Peter Bogetoft

Research output: Contribution to conferencePaperResearch

Abstract

Benchmarking methods, and in particular Data Envelopment Analysis (DEA), have become well-established and informative tools for economic regulation. DEA is now routinely used by European regulators to set reasonable revenue caps for energy transmission and distribution system operators. The application of bench-marking in regulation, however, requires specific steps in terms of data validation, model specification and outlier detection that are not systematically documented in open publications, leading to discussions about regulatory stability and economic feasibility of these techniques. In this paper, we review the modern foundations for frontier-based regulation and we discuss its actual use in several jurisdictions.
Original languageEnglish
Publication date2017
Number of pages37
Publication statusPublished - 2017

Bibliographical note

CBS Library does not have access to the material

Keywords

  • DEA
  • Agency theory
  • Regulation
  • Energy networks

Cite this

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Regulatory Benchmarking : Models, Analyses and Applications. / Agrell, Per J.; Bogetoft, Peter.

2017.

Research output: Contribution to conferencePaperResearch

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N1 - CBS Library does not have access to the material

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AB - Benchmarking methods, and in particular Data Envelopment Analysis (DEA), have become well-established and informative tools for economic regulation. DEA is now routinely used by European regulators to set reasonable revenue caps for energy transmission and distribution system operators. The application of bench-marking in regulation, however, requires specific steps in terms of data validation, model specification and outlier detection that are not systematically documented in open publications, leading to discussions about regulatory stability and economic feasibility of these techniques. In this paper, we review the modern foundations for frontier-based regulation and we discuss its actual use in several jurisdictions.

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KW - Agency theory

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KW - Energy networks

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KW - Agency theory

KW - Regulation

KW - Energy networks

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