Utility benchmarking

How to ask the right question?

Utility benchmarking as part of the tariff setting process is receiving increasing attention throughout Europe. Critics of utility benchmarking point to different regulators using different benchmarking techniques and different model specifications that consequently produce differing results. Critics argue that this is an indication of benchmarking being unreliable.

In a new publication in the German Energy Economics Journal (ZfE), Dr Christoph Riechmann, Director in the Frontier Energy Practice in Cologne and London and Dr Aria Rodgarkia-Dara from the Austrian energy regulator, E-Control, show that different models have evolved, because different regulators are under legal obligations to explore different regulatory questions. Each question requires a specific benchmarking approach.