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The regulatory experience of Italy and the United States with dedicated incentives for strategic electricity transmission investment
Keyaerts, Nico ; Meeus, Leonardo
Keyaerts, Nico
Meeus, Leonardo
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Publication Type
Journal article with impact factor
Editor
Supervisor
Publication Year
2017
Journal
Utilities Policy
Book
Publication Volume
46
Publication Issue
June
Publication Begin page
71
Publication End page
80
Publication Number of pages
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Abstract
There is a trend in regulatory practice towards providing dedicated incentives for strategic investments. Italy and the United States have the longest experience with authorizing returns and risk-mitigating incentives that deviate from standard regulatory treatment for policy purposes. In these countries, the regulatory incentives are based on a case-by-case assessment of capital projects. We find that the Italian scheme is simpler, which reduces administrative costs. The U.S. scheme is more advanced in the case-by-case assessment. Even though dedicated incentives may be controversial, our analysis of both experiences shows that, notwithstanding significant learning costs, both schemes have facilitated substantial financial investment in strategically important infrastructure.
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Keywords
Electricity Transmission, Transmission Grid, Interconnection, Incentive Regulation