Comparison of incentives for distribution system reliability in performance-based regulations

In recent years as many European electricity markets are deregulated, Network utilities are liberalized and privatized. Consequently, the economic regulations of distribution utilities, which is applied due to the monopoly nature of network activities, have switched from cost-based regulation to performance based regulation (PBR). PBR gives Distribution utilities incentives to reduce costs. However, increased cost efficiency may lead to decrements in distribution quality, therefore is quality regulation necessary. In this paper the basic outlines of distribution utility regulation in Sweden, Norway, Spain and the Netherlands are compared. Focus in the comparison lie on the quality regulation framework and the incentives brought upon the distribution utilities based on the PBR-models´ framework.