Skip to Main Navigation

The regulation of investment in utilities: concepts and applications (English)

This paper reviews the common approaches adopted by regulators to the inclusion and valuation of investment in the regulatory asset base and the allocation of costs of investment between different users as well as between connection and usage charges. The former set of issues are key to the creation of incentives for companies to undertake efficient least-cost investment while the latter address the key concern of how revenues are recovered (and the associated risks for the operator). By understanding these issues and how they relate to the investments that are needed in a sector, regulators have an opportunity to design regimes better able to promote necessary investment. Drawing on a worldwide series of case studies from across the regulated sectors the paper illustrates the various approaches to regulating investment and some of the practical implementation problems that are faced. This allows some tentative suggestions for the design of practical investment regimes to be developed.


  • Author

    Hamilton,Ian Alexander, Harris,Clive G.

  • Document Date


  • Document Type


  • Report Number


  • Volume No


  • Total Volume(s)


  • Country


  • Region

    The World Region,

  • Disclosure Date


  • Disclosure Status


  • Doc Name

    The regulation of investment in utilities: concepts and applications

  • Keywords

    operation and maintenance cost;water and sewerage sector;price control period;cost of capital;incentives for investment;Type of Investment;incentives for efficiency;regulatory asset base;allocation of cost;regulation of investment;economies of scale;private capital flow;civil aviation authority;price cap regulation;valuation of asset;expansion of transmission;airport pricing decision;interests of consumer;types of cost;cost of asset;loss of revenue;national environmental agency;form of investment;amount of investment;costs of investment;middle-income developing countries;rates of return;Invitation for Tenders;return on capital;treatment of depreciation;electricity transmission;replacement investment;price determination;efficiency saving;efficiency gain;existing asset;connection charge;individual investment;regulated utility;capital expenditure;capital employed;investment need;pricing system;utility concept;infrastructure sector;regulatory regime;distribution network;transmission utility;connection rate;price review;Quality Enhancement;Capital Investments;investment program;demand management;generating capacity;investment regime;Gas Distribution;electricity distribution;Public Utilities;financing cost;regulatory risk;usage charge;regulated sectors;perceived risk;utility investment;capital intensity;legislative change;environmental target;water industry;independent regulation;entire investment;financial market;price level;regulatory treatment;carrying costs;future consumption;pricing limit;adjustment mechanism;average cost;water distribution;competitive procurement;risk allocation;price expenditure;standard approach;investment scheme;investment cost;medium-term period;regulatory approach;external costs;data issue;Equity Finance;pricing policy;transmission investment;transmission pricing;option value;airport operator;revenue calculation;high debt;efficient operation;opportunity cost;capital stock;variable cost;infrastructure industry;water transmission;subsidiary right;distribution line;additional revenue;quality measure;company control;environmental objective;privatized utility;external force;transmission company;generating plant;data requirement;power transmission;generation capacity;infrastructure business;distribution company;standard definition;safety standard;infrastructure company;Regulatory Bodies;regulatory body;demand risk;demand growth;regulatory practice;mine investment;water concession;consultancy work;cap level;energy market;technological change;natural monopolies;promoting equity;regulated service;private flow;broad assessment;alternative regulatory;regulatory process;financial model;regulatory system;capital input;commercial loss;Investment Type;applicable law;data availability;automatic adjustment;accelerated depreciation;high capital;data limitation;



Official version of document (may contain signatures, etc)

  • Official PDF
  • TXT*
  • Total Downloads** :
  • Download Stats
  • *The text version is uncorrected OCR text and is included solely to benefit users with slow connectivity.


Hamilton,Ian Alexander Harris,Clive G.

The regulation of investment in utilities: concepts and applications (English). World Bank working paper series no. 52 Washington, D.C. : World Bank Group.