Incentive regulation for the German energy market

The German goverment is developing a new energy law that is to introduce efficiency incentives for the operators of electricity and gas networks. Frontier (London and Cologne), together with collaborators Consentec, was retained by the Confederation of German Industry (BDI) and the Association of large energy users (VIK) to develop respective proposals. Findings are summarised in a report that outlines how the existing regime of comparative analysis can be refined to allow for a comprehensive assessment of whether network revenues or tariffs are in line with competition law or future regulations. The study also explores how incentives can be set for network operators to strive for continued efficiency improvements and how the quality of supply can be ensured. The report (in German) can be downloaded here.