This paper shows with a formal model that under monopoly regulation, OPEX-risk can be a source for a CAPEX-bias. If OPEX and CAPEX are substitutes, the regulated firm can reduce the risk of the firm and thereby reduce the true cost of capital by rebalancing OPEX and CAPEX. If the allowed...

In recent years, the OPEX-CAPEX-incentive-bias (short: CAPEX-bias) received renewed attention in regulatory practice. A CAPEX-bias occurs when the OPEX solution is the more efficient approach, but regulation sets distorted incentives to choose the CAPEX solution. This paper presents a promising...

This paper presents an approach for resilience incentives in the regulation of electricity network operators. Resilience is the ability of the power system to deal quickly and efficiently with large-scale and long-lasting power interruptions. It comprises two related aspects: minimizing the...