The last thirty years have witnessed a fundamental change in the regulation of infrastructure industries. Whereas firms were subject to rate of return regulation and protected from entry in the past now they face various forms of incentive regulation competition is actively promoted by many...

Generators supplying electricity markets are subject to volatile input and output prices and uncertain fuel availability. Price-risk may be hedged to a considerable extent but fuel-risk - water flows in the case of hydro and gas availability in the case of thermal plants - may not be. We show...