Utility Tariff Setting for Economic Efficiency and Financial Sustainability - A Review
Herath Gunatilake, Pradeep Perera, and Mary Jane F. Carangal-San Jose review the literature on utility tariff setting with an emphasis on economic efficiency and financial sustainability. The paper discusses the merits as well as the practical limitations in applying marginal cost pricing, and presents details on the estimation of revenue requirements of utilities. It also discuses issues related to reconciliation of economic efficiency and financial sustainability objectives in tariff setting.
- Economic Efficiency and Marginal Cost Pricing
- Financial Considerations in Tariff Setting
- Tariff Setting in Practice
- Concluding Remarks