A framework for quality regulation in electricity distribution

Abstract

To supply quality service is the main goal of the electricity distribution sector, but the diversity and characteristics of the distribution networks pose a huge problem of regulation to be studied. This paper establishes a theoretical framework for technical-economic analysis on quality regulation in electricity distribution sector. Depending on the regulation model, the quality of electricity is simply left to the (good) will of the distributor (rate or return), or is imposed by a command & control regulation (price-cap). If not, we will assume that benchmarking techniques (yardstick competition) will face difficulties to overcome the heterogeneous Distribution Networks. Therefore, the absence of robust incentive quality regulation and the lack of a precise definition of electrical quality in distribution highlight the interest to invest in better mechanisms of incentive regulation of electric quality in distribution.