Pricing of Iran Electricity Distribution Services in Different Price Regulation Schemes with Focusing in Incentive Regulation

Document Type : Original Article

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Ph.D. in Economics, Faculty of Economics, University of Shiraz

Abstract

In natural monopoly conditions, such as the electricity distribution industry, there are various ways to price regulation. In recent years, performance-based regulation or incentive regulation has been more widely considered so these regulation schemes such that price cap regulation and revenue cap reguation becomes the alternative of cost based regulations. The aims of this study is Pricing of electricity distribution services under cost of service, price-cap and revenue-cap regulation schemes. For this aim data of Iranian electricity companies in period of 2006 till 2016, Cross-section specific coefficients in pooled data and a DEA model with both desirable and undesirable outputs and controllable uncontrollable input have been used. The results of pricing in cost of service regulation, electricity distribution service price is more than other regulation schemes in some companies and price cap is more for other.

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