Workshop on Regulatory Economic Benchmarking - October 21-22 in Copenhagen

• How do regulators develop and identify appropriate benchmarking models for their specific needs and objectives?
• What are the challenges and limitations as-sociated with applying benchmarking models in realworld scenarios? 
• How do regulators ensure the accuracy and reliability of benchmarking data and results?
• How do regulators determine the appropriate level of costs to model (i.e. aggregate or disaggregate; direct or indirect or both) and what practices/considerations are involved in combing results from multiple models to set an overall target?
• How do regulators determine a benchmark that is challenging yet achievable? What evidence/arguments are important to consider?

• How do regulatory theories inform the design and implementation of tariffs for different industries/sectors?
• What are the implications of different regulatory theories on market competition and consumer welfare when setting tariffs for companies?
• How do regulators take account of the trade-offs between costs and service, and between short-term bill impact and long-term resilience of the networks?

• What are the main challenges regulators face when determining fair and effective tariff rates?
• What are the most common methods regulators use to translate the benchmarking results to targets to derive tariffs (e.g. profiling of catch-up targets, performance bands, cap and collar, interpolation), and what are their respective advantages and limitations?
• How do regulators address disparities in infrastructure development and regional economic factors when setting uniform tariff rates across different geographic areas?

The workshop is free of charge.

You can also join us for a workshop dinner at the cost of €100, where you'll have the opportunity to get to know your peers.

The registration deadline has passed. Please contact us at ehe@kfst.dk and mafr@kfst.dk to inquire about possible available spots.

We welcome regulators, researchers, and academics to submit their contributions to the workshop.

The deadline for submitting a contribution has passed. Please contact us at ehe@kfst.dk and mafr@kfst.dk to inquire about possible available spots.

As the workshop takes place in Copenhagen with plenty of accommodation options available, we do not recommend specific accommodations.

You can reach the venue easily from Nørreport Station by walking (10 minutes), and you can easily reach Nørreport Station from Copenhagen Airport (20 min by the M2 metro line).

We encourage participants to consider renting a bike to get the full Copenhagen experience.

The Danish Water Regulatory Authority is responsible for calculating the maximum allowed revenue (revenue cap) for all drinking water and wastewater utilities in Denmark handling more than 200,000 m3 of water. We set revenue caps for each utility for a two-year period alternately for drinking water and wastewater firms each year.

Our team consists of approximately 25 employees, mainly with backgrounds in economics or law. The benchmarking team comprises four economists with expertise in regulatory benchmarking models, who also constitute the workshop committee together with Dr. Srini Parthasarathy from Oxera Consulting and Kjartan Emil Rasmussen from the Danish Electricity Regulator.

Since 2011, we have been benchmarking major Danish water companies. Our benchmarking model is continuously developed and adjusted based on reported information from the water companies, as well as new benchmarking theory and knowledge. In the period from 2011 to 2015, water companies were benchmarked on operating costs using Data Envelopment Analysis (DEA).

In 2016, a new economic benchmarking model was introduced to evaluate Danish water companies based on their operating and capital costs. To estimate efficiency potentials as accurately as possible, we began using the Stochastic Frontier Analysis method in a Best-of-Two setup with DEA. This allowed us to leverage the strengths of both methods and provide more robust and fair efficiency estimates.

We are currently considering a new benchmarking method to set tariffs for Danish water companies. This is because we have encountered several practical issues with the SFA model in recent years. As a result, we have been exploring alternative models. We have recently proposed using the robust DEA-Order-M model instead of DEA and SFA. We find that DEA-Order-M has good theoretical properties, is easy for regulated companies to understand, and addresses most of our practical issues. In our search for a new benchmarking model, we have also explored Chance-Constrained Data Envelopment Analysis (CCDEA), Fuzzy DEA, Corrected Ordinary Least Squares (COLS), Modified Ordinary Least Squares (MOLS), Semiparametric Stochastic Frontier Analysis, and Stochastic Nonlinear Envelopment of Data (StoNED). We look forward to presenting some of this work at the workshop.

No, the workshop venue is not fully accessible for individuals with disabilities. Please feel free to contact us for further information.