The Australian Energy Markets Commission (AEMC) has asked us to review the use by regulators of Total Factor Productivity (TFP) methodologies in setting price/revenue controls for network companies. In this report we describe the use of TFP in the context of regulating the following industries:

  • electricity distribution in New Zealand;
  • gas distribution in Ontario, Canada;
  • energy networks in the UK;
  • electricity distribution in the Netherlands; and (in less detail)
  • uses of TFP in selected jurisdictions in North America

We stress at the outset that this report is limited in scope. It describes two aspects of price control arrangements in other jurisdictions:

  • How the regulator has gone about the process of undertaking a TFP study; and
  • How they have used the results of such studies in determining the maximum allowed growth rate of regulated prices.

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