Abstract This study investigates the role of aligning tariff adjustments and quality incentives in a Price cap regulatory regime. According to theory costs and quality are positively related. If additional resources are needed to improve service quality, a high cost high quality utility could be at a disadvantage when tariffs are adjusted by an X-factor that does not include quality. The regulator of the electricity distribution sector of Brazil has set up a public ranking of utilities according to quality compliance at the same time that a quality component is added to the X-factor, in 2013. We develop a stochastic cost frontier integrating all components of the X-factor to rank the utilities based on this integrated efficiency. Comparing this rank with the regulator’s public rank we argue that the resulting differences highlight the importance of using the same factors to rank and adjust tariffs in the sector. Otherwise, incentives would be misplaced with respect to factors used in cost adjustments. In addition, our findings reveal that the utilities’ cost behavior with respect to quality depends on the volume of energy delivered. We believe these results could be considered by the regulator when setting incentives and considering factors to adjust tariffs.

中文翻译：

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协调质量激励措施和电价调整：以巴西配电行业为例

摘要本研究调查了在价格上限监管制度中调整关税调整和质量激励措施的作用。根据理论，成本和质量是正相关的。如果需要额外的资源来改善服务质量，那么当通过不包含质量的X因子调整费率时，高成本的高质量公用事业将处于不利地位。巴西的配电行业监管机构已在2013年根据质量合规性对公用事业进行了公开排名，同时在X因子中添加了质量要素。我们开发了一种随机成本前沿方法，将所有基于此综合效率对公用事业进行排名的X因子。将这一排名与监管机构的公众排名进行比较，我们认为由此产生的差异凸显了使用相同因素对行业内的关税进行排名和调整的重要性。否则，就成本调整中使用的因素而言，激励措施就放错了地方。此外，我们的发现表明，公用事业公司在质量方面的成本行为取决于所输送的能源量。我们认为，在制定激励措施并考虑调整关税的因素时，监管机构可以考虑这些结果。