Experiences of modern rate of return regulation in Finland

This article seeks empirical evidence of how the Finnish electricity distribution companies have responded to regulatory incentives in the rate of return regulation. The effects of regulation on company behaviour were studied by a questionnaire and interview survey. After more than ten years of regulation, the results show that the investment, operation and pricing behaviour of companies have been influenced by regulatory incentives, but the future role of regulation is expected to be even greater. Regulatory incentives were recognised by the companies, but the role of other drivers such as customer value was considered strong. Public companies reported stronger response to regulatory incentives.