Reference Models and Incentive Regulation of Electricity Distribution Networks: An Evaluation of Sweden’s Network Performance Assessment Model (NPAM)

The world-wide electricity sector reforms have led to a search for alternative and innovative approaches to regulation to promote efficiency improvement in the natural monopoly electricity networks. A number of countries have used incentive regulation models based on efficiency benchmarking of the electricity network utilities. While most regulators have opted adopted parametric and non-parametric frontier-based methods of benchmarking some have used engineering designed ‘reference firm’ or ‘norm’ models for the purpose. This paper examines the incentive properties and other related aspects of the norm model NPAM used in regulation of distribution networks in Sweden and compares these with those of frontier-based benchmarking methods. We identify a number of important differences between the two approaches to regulation benchmarking that are not readily apparent and discuss their ramifications for the regulatory objectives and process

Engaging as Partners in Energy Efficiency: A Primer for Utilities on the Energy Efficiency Needs of Multifamily Buildings and Their Owners

The multifamily building sector presents a unique set of challenges and opportunities for utilities seeking to implement effective energy efficiency programs. To deliver successful programs, utilities must understand what motivates building owners to take part in these programs, as well as barriers that may prevent participation.This paper outlines the opportunities to meet energy efficiency goals with multifamily programs. It then describes the benefits that multifamily building owners gain from these programs, and the barriers they face to participation. The paper focuses on rental housing, because these buildings are owned by a single entity and form the largest sector of the multifamily housing market. The paper provides a framework to help utilities develop successful programs that maximize energy savings and create benefits for building owners, tenants, and communities. And lastly, the paper recommends nine program design considerations that can help attract multifamily building owners to utility energy efficiency programs

The simple micro-economics of public-private partnerships

We build a unified theoretical framework to analyze the main incentive issues in Public Private Partnerships (PPPs) and the shape of optimal contracts in those contexts. We present a basic model of procurement in a multitask environment in which a risk-averse agent chooses unobservable efforts in cost reduction and quality improvement. We begin by studying the effect on incentives and risk transfer of bundling building and operation into a single contract, allowing for different assumptions on the contractual framework and the quality of the information held by the government. We then extend the basic model in several directions. We consider the factors that affect the optimal allocation of demand risk and their implications for the use of user charges and the choice of contract length. We study the relationship between the operator and its financiers and the impact of private finance. We discuss the trade-off between incentive and flexibility in long-term PPP agreements and the dynamics of PPP contracts, including cost overruns. We also consider how the institutional environment, and specifically the risk of regulatory opportunism, affects contract design and incentives. We conclude with some policy implications on the desirability of PPPs

Affordable heat: A whole-buildings efficiency service for Vermont families and businesses

Policy Leadership Initiative Year III Addressing Energy Challenges for Low-income Families in Northern New Englan

The theory of incentives applied to the transport sector

Building upon Iossa and Martimort (2008), we study the main incentive issues and the form of optimal contracts for Public Private Partnerships (PPPs) in transports. We present a basic model of procurement in a multitask environment in which a risk-averse firm chooses unobservable efforts in infrastructure and service quality. We begin by analyzing the effect on incentives and risk transfer of bundling building and operation into a single contract. We consider the factors that affect the optimal allocation of demand risk and their implications for the choice of contract length. We discuss the dynamics of PPP contracts and how the risk of regulatory opportunism affects contract design and incentives

Comparative study of commercial building energy-efficiency retrofit policies in four pilot cities in China

The energy efficiency of existing commercial buildings is more challenging to regulate and improve than the energy efficiency of new constructions. In 2011 and 2012, the Chinese Government selected four cities- Shanghai, Tianjin, Shenzhen, and Chongqing- to implement pilot commercial building energy efficiency retrofit program. Based on site surveys and expert interviews in these pilot cities, this research conducted a comparative analysis on incentive policies of local city level. The analysis results show that policy designs of existing commercial buildings should be further improved. The aspects that influence the implementation effect in the future, such as subsidy level, installments, and business model promotion, should be specified in the policy clauses. Referring to the technical solution and cost-benefit in Chongqing, we found that lighting system is the most common retrofit objects while envelope system is the least common one. And the subsidy incentive is greatest for educational buildings, followed by office buildings. In the end, we further discussed the problems and obstacles in commercial building retrofit market, and provided a series of recommendations

Process Evaluation Insights on Program Implementation

This white paper has the explicit intention to draw lessons learned from the past 30 years of energy efficiency program evaluation in order to facilitate improved program design and implementation going forward. The discussion in this white paper is developed based on interviews with 43 individuals who are either practitioners or users of process and market evaluation. In addition, we obtained references to published materials from our contacts and reviewed conference proceedings dating from 1992 to 2008, which resulted in a review of nearly 100 articles or reports documenting the results of, or commenting on, process and market evaluations

Carbon Free Boston: Buildings Technical Report

Part of a series of reports that includes: Carbon Free Boston: Summary Report; Carbon Free Boston: Social Equity Report; Carbon Free Boston: Technical Summary; Carbon Free Boston: Transportation Technical Report; Carbon Free Boston: Waste Technical Report; Carbon Free Boston: Energy Technical Report; Carbon Free Boston: Offsets Technical Report; Available at http://sites.bu.edu/cfb/OVERVIEW: Boston is known for its historic iconic buildings, from the Paul Revere House in the North End, to City Hall in Government Center, to the Old South Meeting House in Downtown Crossing, to the African Meeting House on Beacon Hill, to 200 Clarendon (the Hancock Tower) in Back Bay, to Abbotsford in Roxbury. In total, there are over 86,000 buildings that comprise more than 647 million square feet of area. Most of these buildings will still be in use in 2050. Floorspace (square footage) is almost evenly split between residential and non-residential uses, but residential buildings account for nearly 80,000 (93 percent) of the 86,000 buildings. Boston’s buildings are used for a diverse range of activities that include homes, offices, hospitals, factories, laboratories, schools, public service, retail, hotels, restaurants, and convention space. Building type strongly influences energy use; for example, restaurants, hospitals, and laboratories have high energy demands compared to other commercial uses. Boston’s building stock is characterized by thousands of turn-of-the-20th century homes and a postWorld War II building boom that expanded both residential buildings and commercial space. Boston is in the midst of another boom in building construction that is transforming neighborhoods across the city. [TRUNCATED]Published versio

Which governs - the relationship or the contract?

According to the transaction cost economics literature, a firm’s external contractual relationships must be ‘fit for purpose’. What is a ‘fit for purpose’ contractual relationship should not be a normative decision, but an objective one, to be made with regard to achieving transaction cost efficiency, while defending the core competencies of the firm. Data from a Hong Kong case study is used to examine whether or not the client’s choice of contractual relationship is ‘fit for purpose’ and also to evaluate the impact of such a choice. The findings suggest that maintaining a relationship of high quality as a strategic policy not only reduces recourse to the contract but, also improves the quality and predictability of project performance and, is an antidote to ill-aligned contractual elements. These findings lend support to the growing trend towards relationship or relational contracting in construction

Barriers to industrial energy efficiency: a literature review

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