TY - JOUR

T1 - Issues and Options in the Economic Regulation of European Network Security

AU - Jamasb, Tooraj

AU - Nepal, Rabindra

PY - 2015

Y1 - 2015

N2 - Incentive regulation needs to adapt to the emerging changes in the operating environment of the electricity networks and take into account the security of these. This paper assesses the current issues and options in economic regulation of network security across the European electricity systems. An output-oriented incentive regulatory approach combines the efficiency promoting mechanisms in a revenue cap framework with output-based incentives such as better provision of network security. Thus, incentive regulation is destined to move from pursuing the optimal to being more practical. The RIIO regulatory framework in the UK and the service quality regulation in Italy provide good examples of application of output-based regulation. We also propose an output-based approach for regulation of network security, which accounts for the risks from natural, accidental and malicious threats. We conclude that regulation for network security may also require looking beyond economic network regulation and focus on the wider security policy and regulation interface considering the risks facing the electricity networks.

AB - Incentive regulation needs to adapt to the emerging changes in the operating environment of the electricity networks and take into account the security of these. This paper assesses the current issues and options in economic regulation of network security across the European electricity systems. An output-oriented incentive regulatory approach combines the efficiency promoting mechanisms in a revenue cap framework with output-based incentives such as better provision of network security. Thus, incentive regulation is destined to move from pursuing the optimal to being more practical. The RIIO regulatory framework in the UK and the service quality regulation in Italy provide good examples of application of output-based regulation. We also propose an output-based approach for regulation of network security, which accounts for the risks from natural, accidental and malicious threats. We conclude that regulation for network security may also require looking beyond economic network regulation and focus on the wider security policy and regulation interface considering the risks facing the electricity networks.

KW - Exceptional events

KW - Incentive regulation

KW - Network security

KW - Output-based

KW - Exceptional events

KW - Incentive regulation

KW - Network security

KW - Output-based

UR - https://sfx-45cbs.hosted.exlibrisgroup.com/45cbs?url_ver=Z39.88-2004&url_ctx_fmt=info:ofi/fmt:kev:mtx:ctx&ctx_enc=info:ofi/enc:UTF-8&ctx_ver=Z39.88-2004&rfr_id=info:sid/sfxit.com:azlist&sfx.ignore_date_threshold=1&rft.object_id=1000000000285663&rft.object_portfolio_id=&svc.holdings=yes&svc.fulltext=yes

U2 - 10.1177/178359171501600101

DO - 10.1177/178359171501600101

M3 - Journal article

AN - SCOPUS:84926670138

VL - 16

SP - 2

EP - 22

JO - Competition and Regulation in Network Industries

JF - Competition and Regulation in Network Industries

SN - 1783-5917

IS - 1

ER -