Analytical Report on International Experience Regarding Regulatory Analysis, Assessment and Approval of Long-Term Investment Programs under Incentive-Based Regulation

The Analytical Report on International Experience regarding Regulatory Analysis, Assessment and the Approval of Long-Term Investment Programs under Incentive-Based Regulation is prepared by Municipal Energy Reform Project in Ukraine, USAID. The aim of the study is to analyse the regulation and approval of investment programs under different price regulation methods, and to suggest basic principles for an investment regulatory model in Ukraine.

The price regulation methods are divided into two main categories: ex-post methods and ex-ante methods. By using of ex-ante regulation, the prices are fixed by the regulator before applying those prices. By using of ex-post regulation, the prices are applied by the company without any in advance coordination by the regulator, though the regulator may exercise control later over tariff sizes. There are three main types of ex-ante regulatory models: (i) Rate of Return (RoR) or Cost plus; (ii) RPI-x or incentive type of regulation; and (iii) Hypothetical Network Model (HNM).