European trend to combine regulation with comparative efficiency analysis

Energy experts from around Europe met for the Network Regulation Symposium by the German Energy Economics Association (GEE) in Mannheim to discuss the next steps of energy regulation reform in Germany. Dr. Christoph Riechmann, Director in Frontier's (London and Cologne) Energy Practice, explained how the use of yardstick approaches could benefit network users, shareholders of network operators and also the management of companies. Most European regulators meanwhile rely not only on the companies own cost information but also on cost information of comparator firms when investigating tariffs. The approaches to comparative efficiency analysis and also the use of results from such analysis in tariff setting differ between countries depending on the legal and political environment. Frontier has advised companies in the UK, Scandinavia and Continental Europe as well as regulators in the UK, the Netherlands, Belgium and Austria on strategic and implementation aspects of benchmarking and yardstick competition.