Project Description

PIA delivered a capacity building program for AFD’s energy task team leaders and specialists. The program covered:
● Insights into administered, regulated, and market-based tariffs, discerning their nuances and evaluating differences.
● Distribution of responsibilities among system operator, administration, and regulator in terms of planning, market design, surveillance, tariff setting, procuring sector assets, etc.
● Process of setting up regulated rates from business planning to final tariff decision including instruction of the business plan; tariff request and its assessment; public consultations; ex-post adjustments and the reopener mechanism.
● The tariff-setting conundrum and the delicate balance between operator viability, consumer affordability, and sector development.
● Affordability of tariffs and the temptation of cross-subsidies
● Evolution of tariffs to accommodate emerging trends like distributed generation and demand management
● Incentive regulation and its applications to enhance planning, control costs, improve quality of supply, optimize energy procurement, and implement strategic investments
● Lastly, the significance of political economy in power sector tariff dynamics was explored, equipping participants with comprehensive knowledge to navigate complexities and contribute effectively to energy sector initiatives.

Key Takeaways

Regulated tariff setting is context-dependent, lacking a universal solution. Replicating mature market models in developing countries without considering specific objectives and historical contexts proves ineffective. Customized approaches are essential.

Our Building Blocks