Successes, shortcomings and unfinished business.
Larry Kaufmann (firstname.lastname@example.org) is a senior advisor to Pacific Economics Group and Navigant Consulting. He advised the Ontario Energy Board (OEB) in 2007 and 2008 on the establishment of third-generation incentive regulation for electricity distributors in Ontario. The views expressed in this article are those of Dr. Kaufmann and not necessarily those of OEB board members or OEB staff.
In the past several months, Francis Cronin and Stephen Motluck have published three, largely critical articles in Fortnightly on the regulation of the electricity distribution industry in Ontario. In “Dealing with Asymmetric Risk” (May 2009), the authors criticized the performance-based regulation (PBR) plan established for the industry in 2008 and proposed an alternate mechanism that they claimed would “minimize data requirements and allow firms to reveal productivity potential.”1 This was followed by the two-part “Ontario’s Failed Experiment – Part 1 and Part 2” (July 2009 and August 2009), which argues that service quality has declined in Ontario because of the PBR framework.