CAP PRICES OR CAP REVENUES? THE IMPLICATIONS OF ALTERNATIVE ELECTRICITY PRICING SCHEMES IN JAMAICA

摘要

Though the study is limited to a static model, it does confirm the price cap regime as a superior model to revenue cap regulation. If a revenue cap is expected to encourage energy efficiency, it does so at the expense of efficient price setting. Price cap regulation and energy efficiency can co-exist if the regulated monopolist provides energy services alongside electricity. Changing from a price cap scheme to a revenue cap scheme will create welfare losses for society. Therefore, a price cap system based on Ramsey pricing represents the second-best solution that will deliver the greatest societal benefits.In addition to the introduction of cost and demand uncertainty, future work will examine the differences in both schemes when a cap is imposed for more than one period. Specifically, I will consider the case where the plan resets every five years, which is typical in most jurisdictions.