Impact of regulatory incentive policy to improve the quality of the electricity supply in the electrical sector investment strategy policy

Abstract

This is a multi-case study that aimstot evaluate the impact of regulatory incentives to improve the quality of the electricity supply (Q factor, set by ANEEL in 2011), in the Brazilian electric sector investment strategy policy. Thus , a model of economic evaluation was applied to two electricity distribution companies with different conditions of quality of supply. The evaluation was performed in eighteen scenarios, with and without the Q factor, with investment made in each one of the five-year tariff cycles of one of the distribution companies and in each one of the four-year tariff cycles of the other. The result indicates that regulatory incentive (Q factor) for enhancing the quality of the supply of energy does not significantly alter the profitability of the investments in projects for that purpose. Thus, the regulatory incentive to improve the quality of the electricity supply (Q factor) will not impact the investment strategy of the electricity distributors in Brazil.

Keywords

• Economic Evaluation of Projects
• Incentive Regulation
• Electric Power Distribution
• Reability