An Introduction to Financial and Economic Modeling for Utility Regulators

Estache, Antonio ; Rodriguez Pardina, Martin ; Rodriguez, Jose Maria ; Sember, German

World Bank, Washington, DC

关键词: ECONOMETRIC MODELS;    REGULATORY ENVIRONMENTS;    RATE OF RETURN;    TARIFFS;    SUBSIDIES;   

DOI  :  10.1596/1813-9450-3001
RP-ID  :  WPS3001

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The most effective regulators indeveloping countries are following remarkably similarapproaches. The main common element across "bestpractice" countries is the use of relatively simplequantitative models of operators' behavior andconstraints to measure the impact of regulatory decisions onsome key financial and economic indicators of concern to theoperators, the users, and the government. The authorsprovide an introduction to the design and use of thesemodels. They draw on lessons from international experiencein industrial and developing countries in ordinary orextraordinary revisions and in the context of contractrenegotiations. Simplifying somewhat, these models forceregulators to recognize that, in the long run, privateoperators need to at least cover their opportunity cost ofcapital, including the various types of risks specific tothe country, the sector, or the projects with which they areinvolved. Because these variables change over time,scheduled revisions are needed to allow for adjustments inthe key determinants of the rate of return of the operator.These revisions are a recognition of the fact that all thesedeterminants-tariffs, subsidies, quality, investments, andother service obligations-are interrelated and jointlydetermine the rate of return. At every revision, the rulesof the game for the regulator are exactly the same: tofigure out the changes in the cost of capital and to adjustthe variables driving the rate of return to ensure that itcontinues to be consistent with the cost of capital. If theycan draw on reasonable data, these models do everything anyfinancial model would do for the day-to-day management of acompany but take a longer term view and include an explicitidentification of the key regulatory instruments. They canmonitor the consistency between cash flow generated by thebusiness on the one hand and debt service and operationalexpense needs on the other to address the main concerns ofthe operators. They can also account for a large number ofkey policy factors including access and affordabilityconcerns for various types of consumers. They generallyaccount for the sensitivity of operators and users tovarious regulatory design options.