Efficiency Factor's Determination (X Factor)
The present draft of the paper deals with the following issues:
In the preceding chapter 2, the elements of a cap regulation are explained with special
regard to the role of the X factor within a cap regulation. Since X factors can be determined
by applying different methods, these methods are explained in chapter 3. Chapter 4 contains
details of the computational background and the quantitative application of benchmarking
instruments. Chapter 5 provides insights in international experiences, focusing on countries
which exemplify the practical application of efficiency analysis within an incentive regulation
framework. Chapter 6 provides practical examples for establishment of X factors using two
methods: “building blocks” and “total cost”.