Regulation is here to stay

1
Regulation is here to stay

• Regulation in Sweden
• according to law since 1996
• in reality since 2003
• The regulators job
• to put down our prices

2
Regulators learn from each other

• new Finnish model includes benchmarking from
  Norwegian model
• future Swedish model based on Finnish model

3
Trust is advantageous

• when regulator and distributor have trust in each
  other the whole regulation business is easier for
  both parties

4
Regulators tighten the thumbscrews continously

• by "improving" the regulation model after each
  regulation period
• by making simple models more complex
• regulators believe complexity gives fairer
  treatment

5
Models should be comprehensible

• distributors will not trust the outcome of
  complex and non-transparent models

6
Regulators decisions can be appealed

• appealing the regulators decisions can help
  distributors keep up the prices
• complex models are difficult to grasp but give
  more possibilities for attack

7
Distributors must know their own business

• no. of customers
• size and age of network
• book values
• The regulator will start looking at these factors
  when trying to evaluate your efficiency

8
Distributors need detailed knowledge of

• costs related to customers/to network
• productivity
• costs in relation to other distributorscosts
• factors that explain possible unfavourable
  outcome in benchmarking

9
Distributors must know the value of their assets

• the return on the assets is the most difficult
  question in regulation
• distributors must find arguments for a higher
  return on the assets than what the regulator
  thinks reasonable

10
Distributors must find their arguments

• detailed knowledge of your own company and its
  prerequisites gives you the right line of
  argument
• you must be able to prove everything you say
• Documentation is essential

11
Regulation is here to stay

• it pays off to spend money on regulation matters
• how much is your company willing to pay in order
  to keep the income at a 5 or 10 higher level?

12
Summary

• The regulators job
• to put down our prices
• The distribution companys job
• all the traditional tasks
• challenge the regulator in order to maintain a
  reasonable income level