EPRG 0701

Tooraj Jamasb, Michael Pollitt

Incentive Regulation of Electricity Distribution Networks: Lessons of Experience from Britain

EPRG 0701 Non-Technical Summary | PDF

Also published in:

• Jamasb, T. and Pollitt, M. (2007), “Incentive Regulation of Electricity Distribution Networks: Lessons of Experience from Britain”, Energy Policy 35(12)

Abstract: This paper reviews the recent experience of the UK electricity distribution sector under incentive regulation. The UK has a significant and transparent history in implementing incentive regulation in the period since 1990. We demonstrate the successes of this period in reducing costs, prices and energy losses while maintaining quality of service. We also draw out the lessons for other countries in implementing distribution sector reform. We conclude by discussing the place of incentive regulation of networks within the wider reform context, the required legislative framework, the need for appropriate unbundling, the importance of quality of service incentives, the regulatory information requirements and the role of sector rationalisation.

Keywords: Electricity, liberalisation, regulation, benchmarking