The experience of developed countries shows the high efficiency of incentive regulation.
RAB tariffs, when properly implemented, encourage distribution system operators to reduce costs and actively upgrade their networks. This was stated by Oleg Kozachuk, the head of the state enterprise Khmelnytskoblenergo (Khmelnytsk region electricity distribution system operator (DSO) in an interview with Delo.
From January 1 next year, RAB regulation will be introduced to replace the current regulation. According to Oleg Kozachuk, it will provide a higher level of investment and, accordingly, improve the performance of electricity networks: "RAB-tariffs, if properly implemented, encourage distribution system operators to reduce costs and to actively modernize networks."
The head of Khmelnytskoblenerho says that the experience of developed countries shows the high efficiency of stimulating regulation. "For example, in Romania, asset depreciation decreased from 75% to 48% from 2004 to 2011. Ukraine should use the European experience in implementing incentive regulation," said Khmelnytskoblenerho's top manager.
Earlier, the European Business Association said that the new model should take into account the international experience of countries where RAB regulation has been successfully introduced, namely to avoid dividing the asset base into new and old and to introduce a single rate equal to the weighted average cost of capital.
