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ID171523
Title ProperEffects of long-term tariff regulation on investments under low credibility of rules
Other Title Informationrate-of-return and price cap in Russian electricity grids
LanguageENG
AuthorAvdasheva, Svetlana ;  Orlova, Yulia
Summary / Abstract (Note)The transition from a short-term cost-plus tariff regulation to either a long-term rate-of-return or long-term price cap regulation in Russia started in 2009 and was completed in 2012, causing substantial changes in investment over the course of the reform. We estimate panel data of 46 Russian electricity distribution entities with a dynamic investment model using the system generalized method of moments and addressing potential endogeneity issues. We show that, despite the noncredible regulatory policy, the transition from short-to long-term regulation had a positive and significant effect on the investment rate of regulated entities. The specific long-term regulation design applied in Russia from 2008 to 2017 (either rate-of-return or price cap) had no effect on the investment rate. These results are important for the introduction of changes in regulatory frameworks in developing countries.
`In' analytical NoteEnergy Policy Vol.138; Mar 2020: p.111276
Journal SourceEnergy Policy 2020-03 138
Key WordsRussia ;  Reforms ;  Incentive Regulation ;  Electricity Distribution Grids ;  Rate - of - Return Regulation ;  Long - Term Tariff Regulation