Research Update

August 2015

Tap into our research:

The listing below illustrates the range of topics in PURC’s working papers that assist policymakers and infrastructure executives throughout the world stay on the cutting-edge of knowledge while the regulatory landscape continues to change.


Broadband Regulation and Government Investment in Nationwide UltraFast Fibre Broadband Networks: evidence from New Zealand

New Zealand stands apart from its OECD counterparts as one of the few countries pursuing government investment in a nationwide fibre network. As in the past, when it stood apart with its “light-handed” regulatory approach, New Zealand’s experience can inform other jurisdictions. This paper contributes by documenting and analysing the chronological history of the key political, regulatory and industry actions taken to implement the government fibre investment policy, between 2008 and September 2013.


Competition and Regulation Policy in Antipodean Government-Funded UltraFast Fibre Broadband Markets

Both the Australian and New Zealand governments have committed to spend substantial sums in order to bring forward the nationwide deployment of ultra-fast fibre-to-the-home (FTTH) broadband networks. With deployment proceeding apace, two significant questions have arisen regarding the economic, commercial and political rationale for the Australian and New Zealand governments‟ decisions. The first is why the respective governments are assuming a central role in the design, financing, deployment and (in Australia‟s case) operation of a nationwide network of a specific technology type, given that such intervention is at significant variance with both recent international industry policy and practice advocated by international agencies such as the OECD and the ITU, and the recent policy and regulatory history in both countries. The second is how these new Government-funded networks will affect the nature of competitive interaction in the telecommunications (broadband) industry in their respective countries.


The Essential DNA of Electricity Regulation

We examine the key features of utility regulation, with an eye towards what should be kept and what can be discarded in electricity market reforms. Enterprises are considered public utilities if they are monopolistic and perform an essential public function. Governments create independent regulatory agencies to address two fundamental problems in the control of public utilities, namely the dampening effect that politics has on investment and the value of specialized knowledge. Agencies are more effective in stimulating investment if they are insulated from political pressures to behave opportunistically and if they have sufficient resources to overcome information asymmetries with operators.


Reconsidering Regulatory Uncertainty: Making A Case For Energy Storage

This Article begins the complex dialogue that must take place to address the emerging technologies providing energy storage for our electricity grid. Energy storage has the capacity to be a game-changer for many facets of our grid, providing better integration of renewable energy, enhanced reliability, and reduced use of carbon-intensive fuels. Energy storage faces a number of obstacles, however, including technological, financial, and regulatory uncertainty. This Article focuses on the regulatory uncertainty, and defends the proposition that not all regulatory uncertainty is created equal. It argues for differential treatment of this uncertainty, depending on its context, scope, and source, and applies this framework to the uncertainty surrounding the classification of energy storage. It finds that this uncertainty operates against high baseline levels of uncertainty in the energy industry, is limited in its scope, and is intentionally embraced by the federal regulators in an effort to realize the benefits of regulatory uncertainty. This Article asserts that this form of uncertainty is one that can be managed in a way to avoid stifling the development of this important technology. This Article sets forth strategies for regulators and regulated entities to continue to function, even within this zone of regulatory uncertainty.


The Strategic Context of the UAE’s Nuclear Project: A Model for the Region?

When the government of the United Arab Emirates (UAE) issued a policy statement in April 20081 indicating that the country was seriously considering developing a civilian nuclear-power program, it set the region and the world speculating as to the possible motivations behind such a move at that time. Since that date, the UAE has aggressively forged ahead, signing bilateral agreements with nuclear-supplier countries while increasing cooperation with the International Atomic Energy Agency (IAEA) in support of its bid to add nuclear power to its national energy portfolio. Most recently, the UAE has actually broken ground on its first and second reactors, in 2012 and 2013. At a time when the nuclear industry’s “renaissance” has slowed or even faltered2 as a result of the 2011 Fukushima Daiichi accident, the global dynamics of the industry seemed to have little effect on the bold and confident pace of the UAE’s nuclear plans. Worldwide, the future looks dimmer for nuclear than it did a few short years ago: Germany has pursued a policy of early decommissioning of its nuclear-power capacity;3 the Netherlands has adopted a “wait and see” attitude with respect to new nuclear plants;4 and new plants already under construction in China, France and Finland have experienced delays and cost overruns.5 Even in the face of these signs of a slowdown in the industry, however, the UAE continues to press ahead in its pursuit of nuclear power. Yet why should an oil-rich country like the UAE pursue a civilian nuclear power program, especially at a time when the future of nuclear-power around the world is uncertain?


A Win-Win Mechanism for Electricity Procurement by a Local Distribution Company

A time-of-use rate option design allowing an LDC’s customers to allocate their consumption to be billed at the fixed and daily-varying TOU rates offers a win–win mechanism for electricity procurement in the face of uncertain spot prices and hedging options. Even if all customers have the same risk preferences, the proposed mechanism is Pareto-superior to the tariffs and procurement strategies commonly used in North America.


Technical Inefficiency Effects in a Stochastic Production Function for Managerial Incentives in Public Water Utilities

Performance of state-owned water utilities in developing countries is often weak. This study estimates the impact of managerial incentives upon efficiency using a stochastic frontier production function with revenue water as the output. The empirical analysis utilizes an unbalanced panelled data consisting of revenue water, connections, operating expenditure, water delivered and staff, from Uganda’s nineteen NWSC sub-utilities for a nine-year period, 2002-2010. The inefficiency effects are modelled as a function of utility-specific variables: service coverage, level of financial incentives, target difficulty, and year of observation. While financial incentives and increased service coverage improve efficiency, targets (such as the reduction of non-revenue water) that are perceived as excessive by employees may reduce it. The findings suggest some policy implications: utility managers in the public water sector need to incorporate monetary incentives and increase service coverage to reduce non-revenue water. However, targets need to be set with great care and with transparency.


Good Governance for State-Owned Water Utilities

This study presents key findings from the author’s recent report to the United Nation’s Economic Commission for Latin America and the Caribbean (ECLAC). 1 The fundamental lesson that emerges from that survey of developing countries is that sector regulation has to be embedded in an adequate and consistent institutional framework in order to have a positive impact on performance. Sector regulation, by itself, is no guarantee of performance improvements in the drinking water supply and sanitation sector. Case studies and empirical analyses suggest that without significant changes in the supporting institutions, the standard tools of regulation will not be effective This conclusion is disturbing, especially for developing countries, since it means that the establishment of a regulatory agency might raise hopes, but ultimately, the agency’s rules are unlikely to improve performance without additional, politically difficult initiatives.


Should Utilities Be Required to Bury Power Lines to Protect Them? The No Position.

City requirements to relocate electricity distribution lines underground would likely lead to an inefficient use of electricity consumers’ money. The city government is not as likely as the utility or its regulator to possess the technical expertise necessary to decide whether this undergrounding is either feasible or prudent.


For more information on our research or trainings, please contact us via email (purcecon at warrington.ufl.edu).

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