CS10: Energy Policy and Regulation

Transport and transmission charges are often a major component of the delivered cost of energy to final consumers, and the challenge is intensifying as power systems integrate intermittent renewables that require new grid investment while demand and utilization become more uncertain. In parallel, gas and liquids supply chains face pressure to reduce transport tariffs to sustain competitiveness and affordability. This paper develops an energy-economics framework to evaluate how regulatory methodology and tariff design can lower the delivered cost of electricity and natural gas while keeping transmission lines and pipelines financeable over time.
The paper addresses three questions: (i) how do alternative regulatory approaches (revenue cap, price cap, cost-of-service with indexation, and hybrid incentive schemes) affect the weighted average cost of capital (WACC) through regulatory risk and revenue stability; (ii) how do tariff structures (two-part tariffs, entry–exit pricing, postage-stamp, and locational components) influence cost recovery, utilization, and market liquidity; and (iii) what "no-regrets" market-design instruments (standard firm vs interruptible products, capacity release and secondary trading, and harmonized balancing rules) reduce transaction costs and improve allocative efficiency.
Methodologically, we combine a regulatory finance module (allowed revenue and WACC sensitivity to risk drivers), a tariff-design module (incidence and allocation across users and products), and a system-cost layer that links tariff outcomes to delivered energy costs, curtailment/reliability proxies, and investment feasibility under renewable intermittency. Inputs are built from publicly available regulatory decisions, operator disclosures, and standard parameter ranges, complemented by scenario analysis when data are incomplete.
Expected results show that reducing regulatory uncertainty and improving revenue-quality can lower WACC and total allowed revenue, enabling lower unit tariffs and supporting higher market liquidity. This, in turn, strengthens the business case for renewable integration and regional energy competitiveness without relying solely on expansion CAPEX.

This article examines the distributional and welfare effects of electricity tariff levies used to subsidize residential renewable energy in Brazil, focusing on consumers earning up to the minimum wage. While renewable energy subsidies have played a crucial role in accelerating the energy transition and expanding clean generation, the paper argues that their current design produces regressive outcomes, disproportionately burdening low-income households through higher electricity tariffs.


The study simulates the consumption behavior of a representative low-income consumer choosing between two essential goods-electricity and food (represented by a basic food basket)-over the period from 2018 to 2024. Using data from Brazilian institutions such as ANEEL, EPE, IPEA, and DIEESE, the authors estimate consumer preferences through a Constant Elasticity of Substitution (CES) utility function and an indirect utility function. Two budget constraints are considered: one restricted to electricity and food expenditures, and another based on the minimum wage that includes a residual good representing all other consumption.


The results show that, under the restricted budget constraint, consumers tend to increase electricity consumption at the expense of food, reflecting the association of electricity with comfort and convenience beyond subsistence. When the broader minimum-wage constraint is applied, consumers reduce combined spending on electricity and food in order to allocate more income to other goods. In both modeling frameworks, the removal of renewable energy–related tariff levies leads to higher consumer welfare and higher minimum levels of electricity consumption.


The article concludes that renewable energy levies embedded in electricity tariffs generate allocative inefficiencies and regressive distributional effects. As a policy implication, the authors argue that subsidy mechanisms for residential renewable energy-especially distributed generation-should be redesigned to reduce cross-subsidization and protect economically vulnerable consumers, ensuring that the energy transition advances in a socially equitable and economically efficient manner.

This study simulates three carbon-pricing policy options with alternative revenue recycling to understand implications for Saudi Arabia's economic growth and its decarbonization aspirations. A semi-structural macro-sectoral econometric model extended with energy and emissions linkages is simulated for 2025–2040. The following are worth considering. (i) If policymakers implement early carbon pricing with revenues spent under conventional budget patterns and channels without long-term renewable energy financing, this achieves emissions reduction but dampens economic growth. (ii) A two-year delay in the implementation of announced carbon pricing, combined with short-term solar subsidies financed by green bonds, would alleviate economic losses. (iii) The same as (ii), with carbon price revenues recycled into continuous, long-term solar-capacity expansion programs rather than spending conventionally brings even moderate economic growth, while deepening decarbonization.

This study investigates factors responsible for the poor performance of 67 electric utilities in 47 countries in Sub-Saharan Africa (SSA) region using descriptive data available from the World Bank, International Energy Agency, United States Energy Information Administration and national sources. Both cost- and revenue- side factors are found responsible for the poor financial performance of electric utilities in the region. More than two-thirds of vertically integrated utilities (VIUs) and electricity distributional utilities (EDUs) are unable to cover their operational and debt service costs by their revenues. Higher fuel costs (particularly oil), lower capacity factors, lower capital and labor productivity, high transmission and distribution (T & D) losses and leakage in electricity bill collections are found mainly responsible for the poor financial performance. On the other hand, consumers face higher electricity tariffs than in many countries around the world despite their much lower per capita income. The study also investigates how much the reduction of the T&D losses and elimination of the leakages in bill collection improve the financial performance of utilities and finds that out of 25 utilities currently operating in loss, 11 will have higher revenue than their operating costs due to T&D loss reduction and elimination of bill collection leakage. The findings indicate that policymakers in the SSA region should focus on a portfolio of policies, including switching away from expensive generation to emerging cheaper options, improving factor productivities, efficient institutions/governance, reduction of T&D losses, improvement of bill collection and tariff reforms. Policy priority, however, could vary across countries depending on the roles of various factors contributing to the poor financial performance.

The corpus of national climate policies continues to grow - but to what effect? Using data on 3,917 policy instruments across 43 OECD countries and major emerging economies from 2000-2022, we show that national climate policy portfolios specializing in instrument types and sectors are associated with faster reductions in fossil CO2 emission intensity. Supported by exemplar country case studies, we also provide quantitative evidence that the effectiveness of climate policy is amplified by long-term emission reduction targets and the presence of dedicated governmental bodies including ministries and intergovernmental organisations. The cumulative effect of all climate policy portfolios over our study period amounts to 3.1 GtCO2 fewer emissions in 2022 relative to a no-policy counterfactual - substantially less than what's needed to stay on track for the Paris Agreement goals.