MODEL FOR INCENTIVE REGULATION IN THE TRANSMISSION OF ELECTRICAL ENERGY IN THE REPUBLIC OF CROATIA

Abstract

The regulatory bodies in the European Union have developed many methods for economic regulation. In this article, the concept is developed for the introduction of a method for incentive regulation in the transmission of electrical energy in the Republic of Croatia, bearing in mind the overall circumstances. The Republic of Croatia is in the initial phase of introducing economic regulation in the transmission of electrical energy. Therefore, it is necessary to perform all the necessary preliminary work consistently, such as the separation of the activities within a vertically integrated enterprise, modeling of the electricity market, organizing the electricity market and the recognition of a regulatory body. In the fi rst phase, it will be necessary to begin the development and introduction of the basic and simplest incentive models for economic regulation. The article presents an algorithm for the introduction of a model for incentive regulation in the transmission of electrical energy. The analyzed algorithm is based upon the revenue cap method. The article also discusses the circumstances of introducing said method in the transmission of electrical energy in the Republic of Croatia.