Optimal water tariffs and supply augmentation for cost-of-service regulated water utilities
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Grafton, Quentin; Chu, Long; Kompas, Tom
Description
We describe how a common method for regulating water utilities, cost-of-service regulation, can both in theory and practice result in the premature and economically inefficient water supply augmentation. Using a dynamic model calibrated to demand and supply conditions in Sydney, Australia we show how to optimally determine the time to supply augment using a ‘golden rule’ that minimises the average volumetric price paid by consumers. Our results show that, the greater the water scarcity and the...[Show more]
Collections | ANU Research Publications |
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Date published: | 2015 |
Type: | Journal article |
URI: | http://hdl.handle.net/1885/13798 |
Source: | Utilities Policy |
DOI: | 10.1016/j.jup.2015.02.003 |
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