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Incentive regulation and utility benchmarking for electricity network security


Nepal, R and Jamasb, T, Incentive regulation and utility benchmarking for electricity network security, Economic Analysis and Policy, 48 pp. 117-127. ISSN 0313-5926 (2015) [Refereed Article]

Copyright Statement

Copyright 2015 Economic Society of Australia, Queensland

DOI: doi:10.1016/j.eap.2015.11.001


The incentive regulation of costs related to physical and cyber security in electricity networks is an important but relatively unexplored and ambiguous issue. These costs can be part of cost efficiency benchmarking or, alternatively, dealt with separately. This paper discusses the issues and proposes options for incorporating network security costs within incentive regulation in a benchmarking framework. The relevant concerns and limitations associated with the accounting and classification of network security costs, choice of cost drivers, data adequacy and quality and the relevant benchmarking methodologies are discussed. The analysis suggests that the present regulatory treatment of network security costs using benchmarking is limited to being an informative regulatory tool rather than being deterministic. We discuss how alternative approaches outside the benchmarking framework, such as the use of stochastic cost-benefit analysis and cost-effectiveness analysis of network security investments can complement the results obtained from benchmarking.

Item Details

Item Type:Refereed Article
Keywords:benchmarking, regulation, exceptional events
Research Division:Economics
Research Group:Applied economics
Research Field:Industry economics and industrial organisation
Objective Division:Economic Framework
Objective Group:Microeconomics
Objective Field:Industrial organisations
UTAS Author:Nepal, R (Dr Rabindra Nepal)
ID Code:129885
Year Published:2015
Deposited By:TSBE
Deposited On:2018-12-20
Last Modified:2019-01-15

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