Textbook: Price Regulation and Tariffs

The purpose of this textbook is to equip students with the core concepts, objectives and
techniques of designing and evaluating rate structures in the energy sector. The text consists
of the following modules.

  • Module 1 introduces financial analysis, one of the basic inputs of tariff development
    and control. It also describes the method of determining the revenue requirement of
    regulated energy companies.
  • Module 2 after a short introduction of basic economic concepts, describes the basic
    normative approaches and methods of tariff design.
  • Module 3 contains a classification of observable consumption patterns and
    corresponding consumer tariffs. The module also explains the rationale behind the
    regulation of prices through which access to transmission grids can be obtained by the
    participants of the competitive market.
  • Module 4 compares the practical policies of rate-of-return and incentive regulation
    under different industry conditions, and draws attention to the often conflicting
    objectives involved in the process of designing a practical regulatory policy.
  • Module 5 shows how the likely effects of different policy measures can be
    investigated, and raises some important aspects to be considered when assessing social
    impacts of energy policy decisions.


Regional Centre for Energy Policy Research (REKK)

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