The Experience of Italy and the US with Exceptional Regulatory Incentives for Exceptional Electricity Transmission Investments

25 Pages Posted: 17 Jul 2015

See all articles by Nico Keyaerts

Nico Keyaerts

European University Institute

Leonardo Meeus

European University Institute; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Date Written: June 2015

Abstract

There is a trend in regulatory practice towards exceptional incentives for exceptional investments. Italy and the US have the longest experience with a regulatory framework for strategically important investments that deviates from the default framework. In these countries, the incentives provided to the project promoter are based on a case-by-case assessment of the project. Policy makers and regulatory authorities in countries that are considering setting up such a framework can learn from these experiences. In this paper, we therefore analyze them in detail. We find that the Italian scheme is simpler, which reduces the administration costs. The US scheme is more advanced in the case-by-case assessment of the requested incentives. However, both schemes have evolved, each becoming more sophisticated and complex. Countries that are considering the introduction of exceptional regulatory incentives for exceptional electricity transmission investments should note that this is a process that will require fine-tuning.

Keywords: Electricity Transmission; Transmission grid; Interconnection; Incentive Regulation

Suggested Citation

Keyaerts, Nico and Meeus, Leonardo, The Experience of Italy and the US with Exceptional Regulatory Incentives for Exceptional Electricity Transmission Investments (June 2015). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2015/44, Available at SSRN: https://ssrn.com/abstract=2631085 or http://dx.doi.org/10.2139/ssrn.2631085

Nico Keyaerts (Contact Author)

European University Institute ( email )

Fiesole, Tuscany
Italy

Leonardo Meeus

European University Institute ( email )

Fiesole, Tuscany
Italy

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

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