The past ten years have seen a number of European regulatory authorities introduce statutory incentives to the electricity distribution sector aimed at improving efficiency, supporting investment, and increasing service quality. In practice, these incentive schemes evolve over time to account for the goals achieved, the lessons learned and the emergence of new priorities. The paper focuses on the Italian experience of regulating service quality in the electricity distribution sector. As the fourth tariff revision approaches, we pinpoint two specific problems worth addressing before the next period. First, despite a significant convergence of results, quality levels in southern Italy are still lower than in the north. Second, a significant number of distribution areas have already achieved the long-term objectives set by the regulator; even if no further improvements are observed, companies are still entitled to significant rewards. We suggest that: i) the relationship between incentive regulation and quality in electricity networks needs further analysis; and ii) the present reward and penalty mechanism might need adjusting to specifically address the abovementioned issues.
Keywords: Regolazione incentivante, distribuzione elettrica, qualità del servizio
Jel Code: L51, L94, L98