Business, Management and Accounting
4 years ago

Utility regulators worldwide adopt simple models to ensure fair financial decisions

An introduction to financial and economic modeling for utility regulators
Antonio Estache, Martín Rodríguez Pardina, José María Calama Rodríguez, Germán Sember

Paper Summary

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Utility regulators in developing countries use simple financial models to measure the impact of their decisions on operators, users, and the government. These models help regulators ensure that operators can cover their costs and make a fair profit. By regularly updating key factors like tariffs and quality standards, regulators can keep the rate of return consistent with the cost of capital. The models also consider factors like access and affordability for different types of consumers. Overall, these models help regulators make informed decisions that benefit everyone involved in the utility sector.