National Approaches to Electrification – Price/Tariff Regulation - Revision history

Ranisha at 15:49, 30 July 2018

2018-07-30T15:49:16Z

Johanna at 14:51, 30 July 2018

2018-07-30T14:51:00Z

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Johanna von Behaim at 18:17, 17 July 2018

2018-07-17T18:17:50Z

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Johanna von Behaim at 15:39, 9 July 2018

2018-07-09T15:39:55Z

Johanna von Behaim at 11:49, 27 June 2018

2018-06-27T11:49:02Z

Johanna von Behaim at 15:17, 26 June 2018

2018-06-26T15:17:42Z

Johanna von Behaim at 11:46, 26 June 2018

2018-06-26T11:46:13Z

Johanna von Behaim at 11:42, 26 June 2018

2018-06-26T11:42:18Z

Johanna von Behaim at 21:05, 25 June 2018

2018-06-25T21:05:33Z

Johanna von Behaim at 21:04, 25 June 2018

2018-06-25T21:04:53Z

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 [[File:Back to NAE Overview Page.png|center|800px|NAE Overview Page|alt=NAE Overview Page|link=National Approaches to Electrification – Review of Options]]
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 <span style="color:#FFFFFF"></span>It is usual for [[Portal:Grid|grid]]&nbsp;systems to use a uniform price/tariff structure, relying on the cross-subsidies inherent in a single unitary system with a single owner to balance differences in cost of provision in different areas. However, even in a grid context a uniform price/tariff structure can dis-incentivize the electricity provider from extending access to more remote, low demand areas, where the cost of provision is higher and they may be unable to recover costs or will have to raise prices for all customers.<br/>
-If a uniform tariff is imposed on grid-connected [[Portal:Mini-grid|mini-grids]], distribution systems or isolated mini-grids, which are separately owned, it will be necessary to establish a system of subsidies or cross-subsidies between providers. Without this, providers in areas where costs are lower may make excess profits while in areas where costs are higher providers become insolvent or users remain unserved.&nbsp; For this reason individual price/tariff regulation is often applied to larger mini-grids, though for small mini-grids the costs may out-balance the benefits of individual price/tariff regulation, and a uniform tariff may be applied.<br/>
+If a uniform tariff is imposed on grid-connected [[Portal:Mini-grid|mini-grids]], distribution systems or isolated mini-grids, which are separately owned, it will be necessary to establish a system of subsidies or cross-subsidies between providers. Without this, providers in areas where costs are lower may make excess profits while in areas where costs are higher providers become insolvent or users remain unserved.&nbsp; For this reason, individual price/tariff regulation is often applied to larger mini-grids, though for small mini-grids the costs may out-balance the benefits of individual price/tariff regulation, and a uniform tariff may be applied.<br/>
-For standalone systems, prices are frequently unregulated.&nbsp; If prices are regulated, it’s more likely to be on a uniform than an individual basis, since standalone system businesses are not usually tied to a location and so differences in costs are likely to be linked to their technology offer, efficiency of operation, or [[Portal:Financing and Funding|financing]] structure rather than any fundamental factors outside the businesses control. (Within any uniform price regulation of standalone systems it will be necessary to consider how to incentivize system providers to move into more remote areas where distribution costs are higher).
+For standalone systems, prices are frequently unregulated.&nbsp; If prices are regulated, it’s more likely to be on a uniform than an individual basis, since standalone system businesses are not usually tied to a location and so differences in costs are likely to be linked to their technology offer, efficiency of operation, or [[Portal:Financing and Funding|financing]] structure rather than any fundamental factors outside the business's control. (Within any uniform price regulation of standalone systems it will be necessary to consider how to incentivize system providers to move into more remote areas where distribution costs are higher).
-The issues inherent in a uniform price/tariff regulatory structure will be all the greater if it is extended across more than one technology, for instance if isolated mini-grids or standalone systems are expected to supply electricity at the same prices as the grid system.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
+The issues inherent in a uniform price/tariff regulatory structure will be all the greater if it is extended across more than one technology, for instance, if isolated mini-grids or standalone systems are expected to supply electricity at the same prices as the grid system.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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-It is in principle possible to set individual prices/tariffs for different areas within a [[Portal:Grid|grid]]&nbsp;system. This could have the advantage of incentivizing the grid company to extend into more remote areas where costs are higher, but is often politically unacceptable and a uniform price/tariff structure is therefore most often used. Grid connected [[Portal:Mini-grid|mini-grids]]&nbsp;and distribution systems rely on the sale of electricity to the grid, and import of electricity from the grid and its sale to users, as well as sale of own-generated electricity to users. Clarity on how each of these tariffs is set and regulated is vital. Tariffs for import of electricity from and export to the grid will usually be on a uniform price/tariff basis. Tariffs for users of grid- connected mini-grids as well as isolated mini-grids are usually set individually for each mini-grid or distribution area (or mini-grid company) to reflect their specific costs and any subsidies or grants they may have received. For larger, particularly grid-connected, systems, these factors may be overcome by political considerations and attempts to achieve equal treatment of users considerations (but cost-reflective grants or subsidies, or cross-subsidies, will then be needed to maintain economic sustainability). At the other end of the scale it may be concluded that the costs and bureaucracy of agreeing individual tariff levels for single small mini-grids may be unjustified. It is most usual to leave tariffs for mini-grids below a certain size unregulated (on the basis that they do not create an effective monopoly and so purchase decisions can be left to users), though use of a uniform price/tariff is also an option.
+It is in principle possible to set individual prices/tariffs for different areas within a [[Portal:Grid|grid]]&nbsp;system. This could have the advantage of incentivizing the grid company to extend into more remote areas where costs are higher, but is often politically unacceptable and a uniform price/tariff structure is therefore most often used. Grid connected [[Portal:Mini-grid|mini-grids]]&nbsp;and distribution systems rely on the sale of electricity to the grid, and import of electricity from the grid and its sale to users, as well as sale of own-generated electricity to users. Clarity on how each of these tariffs is set and regulated is vital. Tariffs for import of electricity from and export to the grid will usually be on a uniform price/tariff basis. Tariffs for users of grid- connected mini-grids as well as isolated mini-grids are usually set individually for each mini-grid or distribution area (or mini-grid company) to reflect their specific costs and any subsidies or grants they may have received. For larger, particularly grid-connected, systems, these factors may be overcome by political considerations and attempts to achieve equal treatment of users considerations (but cost-reflective grants or subsidies, or cross-subsidies, will then be needed to maintain economic sustainability). At the other end of the scale, it may be concluded that the costs and bureaucracy of agreeing individual tariff levels for single small mini-grids may be unjustified. It is most usual to leave tariffs for mini-grids below a certain size unregulated (on the basis that they do not create an effective monopoly and so purchase decisions can be left to users), through use of a uniform price/tariff is also an option.
 Prices for standalone systems are also generally unregulated, though where public funding is used to support provision of standalone systems, it may (as with the [[NAE Case Study: Bangladesh, IDCOL Solar Home Systems|NAE Case Study of the Bangladesh IDCOL programme]]) be regarded as appropriate to regulate prices. If the move towards pay-as-you-go, with users paying for electricity as they do from grid or mini-grids, while suppliers retain ownership of the capital equipment, continues or accelerates, regulation of electricity prices may become more relevant. If they are regulated it’s more likely to be on a uniform than an individual basis (since standalone system businesses are not usually tied to a location and so differences in costs are likely to be linked to their technology offer, efficiency of operation, or [[Portal:Financing and Funding|financing]]&nbsp;structure rather than any fundamental factors outside the businesses control).
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 {{NAE Acknowledgements}}
 [[Category:Grid]]

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 = Unregulated =
-For more information on this topic please see the [[National Approaches to Electrification – Legal Basis#Unregulated|'Unregulated' Sub-Section on the NAE Legal Basis Page]].<br/>
+For more information on this topic please see the [[National Approaches to Electrification – Legal Basis#Unregulated|'Unregulated' Sub-Section on the NAE Legal Basis Page]].
 = References =

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-It is in principle possible to set individual prices/tariffs for different areas within a grid system. This could have the advantage of incentivizing the grid company to extend into more remote areas where costs are higher, but is often politically unacceptable and a uniform price/tariff structure is therefore most often used. Grid connected mini-grids and distribution systems rely on the sale of electricity to the grid, and import of electricity from the grid and its sale to users, as well as sale of own-generated electricity to users. Clarity on how each of these tariffs is set and regulated is vital. Tariffs for import of electricity from and export to the grid will usually be on a uniform price/tariff basis. Tariffs for users of grid- connected mini-grids as well as isolated mini-grids are usually set individually for each mini-grid or distribution area (or mini-grid company) to reflect their specific costs and any subsidies or grants they may have received. For larger, particularly grid-connected, systems, these factors may be overcome by political considerations and attempts to achieve equal treatment of users considerations (but cost-reflective grants or subsidies, or cross-subsidies, will then be needed to maintain economic sustainability). At the other end of the scale it may be concluded that the costs and bureaucracy of agreeing individual tariff levels for single small mini-grids may be unjustified. It is most usual to leave tariffs for mini-grids below a certain size unregulated (on the basis that they do not create an effective monopoly and so purchase decisions can be left to users), though use of a<br/>uniform price/tariff is also an option.
+It is in principle possible to set individual prices/tariffs for different areas within a grid system. This could have the advantage of incentivizing the grid company to extend into more remote areas where costs are higher, but is often politically unacceptable and a uniform price/tariff structure is therefore most often used. Grid connected mini-grids and distribution systems rely on the sale of electricity to the grid, and import of electricity from the grid and its sale to users, as well as sale of own-generated electricity to users. Clarity on how each of these tariffs is set and regulated is vital. Tariffs for import of electricity from and export to the grid will usually be on a uniform price/tariff basis. Tariffs for users of grid- connected mini-grids as well as isolated mini-grids are usually set individually for each mini-grid or distribution area (or mini-grid company) to reflect their specific costs and any subsidies or grants they may have received. For larger, particularly grid-connected, systems, these factors may be overcome by political considerations and attempts to achieve equal treatment of users considerations (but cost-reflective grants or subsidies, or cross-subsidies, will then be needed to maintain economic sustainability). At the other end of the scale it may be concluded that the costs and bureaucracy of agreeing individual tariff levels for single small mini-grids may be unjustified. It is most usual to leave tariffs for mini-grids below a certain size unregulated (on the basis that they do not create an effective monopoly and so purchase decisions can be left to users), though use of a uniform price/tariff is also an option.
 Prices for standalone systems are also generally unregulated, though where public funding is used to support provision of standalone systems, it may (as with the [[NAE Case Study: Bangladesh, IDCOL Solar Home Systems|NAE Case Study of the Bangladesh IDCOL programme]]) be regarded as appropriate to regulate prices. If the move towards pay-as-you-go, with users paying for electricity as they do from grid or mini-grids, while suppliers retain ownership of the capital equipment, continues or accelerates, regulation of electricity prices may become more relevant. If they are regulated it’s more likely to be on a uniform than an individual basis (since standalone system businesses are not usually tied to a location and so differences in costs are likely to be linked to their technology offer, efficiency of operation, or financing structure rather than any fundamental factors outside the businesses control).

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-<span style="color:#FFFFFF;"><span style="font-size: 13.6px;">Definition:</span></span><br/>
+<span style="color:#FFFFFF;"><span style="font-size: 13.6px;">Definition</span></span><br/>
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-<span style="color:#FFFFFF;">Delivery Models</span><br/>
+<span style="color:#FFFFFF;">Delivery Model</span><br/>
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-<span style="color:#FFFFFF;">Legual Basis</span><br/>
+<span style="color:#FFFFFF;">Legual Basis</span>
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-= Uniform Price/Tariff:<br/> =
+= Uniform<br/> =
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-= Individual Price/Tariff =
+= Individual =
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