The regulation of distribution utilities is evolving from a traditional approach based
on a cost of service or rate of return remuneration, to ways of regulation more specifically focused on providing incentives for improving efficiency, known as performance-based regulation or ratemaking. Modern regulation systems are also, to a higher degree than previously, intended to simulate competitive market conditions.
Market Design's biennial international conference gathered representatives from 18 countries to
discuss “Methods to regulate unbundled transmission and distribution business on electricity markets”. Speakers representing nine different countries and with backgrounds (academics, industry and regulatory) presented their experiences and most recent work on how to make the regulation of the unbundled distribution business as accurate as possible.
This paper does not cover everything that was presented or discussed at the conference. Rather, it is a purposely restricted document where we focus on a few selected themes and experiences.