Price Regulation and the Incentives to Pursue Energy Efficiency by Minimizing Network Losses
研究了不同监管制度下公用事业公司投资能效项目以减少网络损失的激励，发现价格上限监管比无监管或强制目标监管更能激励投资，而回报率监管则无激励。
This paper examines the incentives embedded in different regulatory regimes for investment by utilities in energy efficiency programs that aim to reduce network losses. In our model, a monopolist chooses whether to undertake an investment in energy efficiency, which is not observable by the regulator. We show that, in equilibrium, the monopolist chooses to exert positive effort more often under price cap regulation than under no regulation or mandated target regulation and that she exerts no effort under rate of return regulation. This result contrasts with an extensive literature that focuses on end-user energy conservation and shows that price caps are ineffective for achieving energy efficiency as utilities have an incentive to maximize sales volume. Thus, policies that are designed to promote demand-side energy conservation may diminish the utilities’ incentives to pursue supply-side energy efficiency through minimizing network losses.