Research On Incentive Regulation To Distribution Utilities Based On Yardstick Competition

This paper discusses the application of incentive regulation to distribution utilities in China electricity industry.Referring to the experiences of distribution regulation in other countries, this paper presents an incentive regulation model and approach based on Yardstick competition for Chinese distribution utilities. This paper combines analytic hierarchy process and data envelopment analysis together, provides an approach on assessing the operation performance of distribution utilities, namely hierarchical yardstick competition approach. After assessing distribution utilities'operation performance, the model combines price regulation and quality control together. The numerical example is given to prove its feasibility and validity. This research is expected to provide theoretical guideline for steadily pushing price and quality regulation and setting up the modern power regulation system in China, also to the manager of electric company for decision-making.