Region: Global
Country: Global / Non-Specific
Keywords: Disruption and PPPs **, Project finance
Document Link(s):
Document Summary:
This manual, which is the first of a series of learning materials for infra- structure professionals, provides new economic regulators with practical guidance on how to proceed in this fairly technical new field. It addresses a need among practitioners that neither the recently published academic literature nor the general literature on infrastructure privatization have met. The material has benefited from the suggestions of practitioners inside and outside the World Bank. EDI welcomes any comments that will help further its relevance and usefulness.
Document Details:
This manual describes the task that an economic regulator should undertake when revising the price control for a regulated company. The aim of regulation is to protect consumers, while ensuring that the company remains viable and has an incentive to operate efficiently. After an introduction in section 1, section 2 discusses the basic principle of price control regulation. Most systems of regulation include an appeal mechanism to protect the company against an excessively zealous regulator, which means that the regulator will have to make his proposals in time to allow an appeal, should the company wish to make one. Section 3 discusses the procedures the regulator should follow. Section 4 discusses the form of price control the regulator must select to implement. Section 5 offers examples of revenue requirements. The regulator should ask the company for information on its present and projected operating costs, its assets, its investment plans, and its demand forecasts. These are discussed in sections 6-8. The rate of return is critical in determining the amount of revenue needed, and ways to determine an appropriate rate of return are discussed in section 9.
Updated: December 27, 2023