A Report on the Theory and Practice of Performance-Based Regulation

68 Pages Posted: 25 Jan 2021

See all articles by Dennis Weisman

Dennis Weisman

Kansas State University - Department of Economics

Date Written: December 12, 2018

Abstract

This report is designed to be a self-contained introduction to performance-based regulation (PBR) with an emphasis on the energy sector in North America. The main topics include: key differences between PBR and traditional cost-of-service regulation (COSR), the various forms of PBR and their efficiency properties, common misconceptions about PBR, the economic and public policy principles that should inform the design and implementation of PBR, the mechanics of PBR, the advantages and disadvantages of earnings sharing mechanisms, the importance of regulatory commitment and the role of benchmarking in PBR regimes.

Keywords: Performance-Based Regulation, Regulatory Principles, Incentives, Regulatory Commitment

JEL Classification: L51, L96

Suggested Citation

Weisman, Dennis, A Report on the Theory and Practice of Performance-Based Regulation (December 12, 2018). Available at SSRN: https://ssrn.com/abstract=3765691 or http://dx.doi.org/10.2139/ssrn.3765691

Dennis Weisman (Contact Author)

Kansas State University - Department of Economics ( email )

Manhattan, KS 66502-4001
United States

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