Pilot E-Learning Course on Energy Regulation
October 24 - December 5

Brief Description of the Course:

The course focuses on the following regulatory issues on basic-intermediate level:

1. Institutions and Economics of Regulation

2. Economic Fundaments of Electricity Monopoly Regulation

3. Regulation of Transmission Networks and System Operators

4. Regulation of Distribution Networks

The course is provided by the academic staff of Comillas University, Madrid. The course director is Professor Ignacio Perez-Arriaga, former Commissioner with the Spanish energy regulator. It runs for 6 weeks and is given ONLY IN ENGLISH LANGUAGE. Each module has a series of assignments that must be completed over a one-week period of time and with specific deadlines. The “class” consists of some 30 practicing regulators and staff from ERRA members. It will provide participants with a good opportunity to gain new insights and develop professional relationships.

The course is available at the following website:

http://84.246.212.9/erra/

Week 1: INTRODUCTION AND USE OF THE ON-LINE PLATFORM

Instructor: Dr. Carlos Vázquez Martínez (Comillas University)

A. Regulatory models

1.Introduction: regulation and regulatory reform
2. Regulatory tools: traditional and incentive-based regulation:
3. Regulatory change in the electricity industry
4.Activities in the electricity industry: network activities and activities that can be conducted on a competitive marketplace.
5.Regulatory models for the electricity industry
6. Separation of activities
7. Summary

B. Regulatory institutions

1. Introduction
2. Regulatory bodies
3. Regulatory body independence
4. Regulatory commission structure
5. Elements common to all independent regulatory bodies
6. Summary

C. Twelve years of electricity industry reform

1 Fundamentals of monopoly regulation
2 Cost-of-service regulation
3 Incentive-based regulation

• Price cap
• Revenue cap
• Mechanisms for sharing earnings and losses
• Other aspects of incentive-based regulation

4 Basic elements of price or revenue caps

• Present value of costs and revenues
• Rate base, investment and depreciation
• Rate of return or cost of capital
• Duties and taxes
• Operating costs
• Quality of supply
• Revenues, tariffs and sales

1 Description of the electricity transmission business

• Technological aspects
• Economic aspects
• The role of transmission in liberalised regulation of the industry, identification of activities and general organisational principles
• Network effects: ohmic dissipation and grid constraints. Nodal pricing
• Identification of the major regulatory issues in transmission

2 Transmission network investment

• Fundamentals
• Centralised planning
• Single, private transmission company
• Market player initiative
• Merchant lines

3 Access to the transmission network

• Fundamentals
• Allocation methods based on nodal or zonal pricing. Short term
• Limited capacity allocation methods based on redispatching. Short term
• Methods for allocating limited capacity based on market mechanisms. Short and long term

4 Remuneration for transmission. Prices and tariffs

• Fundamentals
• Energy prices (short-term signals)
• Network tariffs (long-tem signals)
• Average and marginal participation methods

5 Transmission in regional markets

• Fundamentals
• Remuneration for transmission on a regional market
• The European Union’s IEM
• Methods for allocating network charges in the IEM

6 References

Week 5: REGULATION OF DISTRIBUTION NETWORKS

Instructor: Dr. Tomás Gómez (Comillas University)

1 Electricity distribution. Introduction

2 Distribution grids and distributor functions

• Network structure
• Distribution functions

3 Regulating distribution: licences, access and rates

• Licences
• Grid access
• Grid rates

4 Distribution company remuneration

• England and Wales
• Norway
• California
• Spain

5 Quality of supply

• Continuity of supply
• Technical quality of the product
• International experience on quality regulation

6 Technical and non-technical losses

7 Connection of distributed generation to distribution grids