Abstract
Understanding the objective of economic regulation as mimicking the process of competition, rather than the outcome of theoretical competitive markets, recognises the need for regulated energy transmission and distribution network service providers to respond to consumer preferences. The regulator, network service providers, and consumer advocates in Australia have conducted experiments on ways consumer preferences can shape regulatory proposals. These experiments demonstrate that agreements about regulatory proposals between the network service provider and a counterparty representing the interests of consumers are effective in ensuring that the proposal reflects consumer preferences. The paper demonstrates that in this process, consumers can also design output-oriented incentive schemes proposed by performance-based regulation.
Published Version
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