REMUNERATING DISTRIBUTION IN SPAIN Jordi Dolader, Luis Maqueda, Antonio Candela CIRED 2003 - Barcelona

REGULATORY POINT OF VIEW(I) NATURAL MONOPOLY ECONOMIES OF SCALE COST SUBADITIVITY NETWORK ECONOMIES A BIG PROBLEM : CROSS SUBSIDIES

REGULATORY POINT OF VIEW(II) PROFIT OPORTUNITY PRICES CUT DOWN CUSTOMERS FIRMS AVOID ABUSE OF NATURAL MONOPOLY DISTORSION IN THE ACTIVITY REGULATORY COSTS BENEFITS COSTS SAVINGS FROM THE EFFICIENCY MEASURES REGULATORY COSTS

INCENTIVE REGULATION Decouples profits from firm´s costs Remuneration procedurement fixed for the rate period Incentives to reduce and control its costs QoS problems, ratched effect

GENERAL SCHEME

REGULATORY ACCOUNTS

REFERENCE NETWORK MODEL Basis Results Location and characterisation of demand Facilities Minimizing trinomial (Investment, Operation cost and Losses) WORKING UNDER DIFFERENT SUPPOSALS Catalogue of instalments Subject to QoS requirements Facilities in different Scenarios

ANALYSIS PROCEDUREMENT

UPDATING REMUNERATION (I) Losses reduction incentives Efficiency factor Quality of service Firm Year Recognised costs for increased activity Adjusting factor from forecasted values to real ones Remuneration Forecasted increase in the Retail Price Index

UPDATING REMUNERATION (II) Recognised costs for increased activity Increasing activity costs will be remunerated considering activity costs inductors Incentives for better quality of services The incentives/penalties that will be received by each firm, is calculated with this phormula:

UPDATING REMUNERATION (III) Incentives for losses cut down Incentives and penalties that will be given to each firm for their losses reduction, will be calculated with this phormula: Updating forecasted parameters in the past with real ones