REMUNERATING DISTRIBUTION IN SPAIN

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REMUNERATING DISTRIBUTION IN SPAIN
Jordi Dolader, Luis Maqueda, Antonio
Candela CIRED 2003 - Barcelona
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REGULATORY POINT OF VIEW(I)
NATURAL MONOPOLY
ECONOMIES OF SCALE
COST SUBADITIVITY
NETWORK ECONOMIES
A BIG PROBLEM
CROSS SUBSIDIES
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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
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INCENTIVE REGULATION

• Decouples profits from firms costs
• Remuneration procedurement fixed for the rate
  period

Incentives to reduce and control its costs
QoS problems, ratched effect
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GENERAL SCHEME
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REGULATORY ACCOUNTS
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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
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ANALYSIS PROCEDUREMENT
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UPDATING REMUNERATION (I)
Losses reduction incentives
Efficiency factor
Quality of service
Firm
Recognised costs for increased activity
Year
Adjusting factor from forecasted values to real
ones
Remuneration
Forecasted increase in the Retail Price Index
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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
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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