Sanford V. Berg

• Bachelor of Arts, University of Washington 1966; PhD--Economics, Yale University 1970
• Professor Emeritus at University of Florida

This paper examines a model of privatization and divestiture of a vertically integrated public monopoly. The framework is used to derive general conditions of how mixed companies might be used to promote efficient outcomes without assuming either an ideal social planner or superior cost performance of private enterprise. The conditions suggest that...

Key performance indicators (KPIs) are widely recognized as a basis for evaluating water utility operations in developing countries and for designing both regulatory and managerial incentives that improve performance. A number of methodolgies can be used for assessing performance, with KPIs and overall performance indicators serving as more comprehe...

The primary drivers of the creation of infrastructure networks are the benefits that can be achieved through collective action. For example, global and regional networks of regulators enable agencies to obtain inputs and create outputs that would otherwise be unavailable or very expensive. Such organizations act as intermediaries, providing forums...

This article examines factors that are important for data collection and information initiatives in the water sector, where government ownership and operation is usually the case. The problems are compounded for fragile, conflict-affected, and low income states. This study presents issues, potential actions, and supporting examples for monitoring a...

This paper explores how adaptive leadership and associated tactics can enable a utility to confront challenges and improve water utility performance. We find that well-designed tactical plans based on individual performance agreements (IPAs) are useful when implementing an organization’s strategic direction. The case of the National Water and Sewer...

A number of studies have emphasized that governance has many components, including accountability, autonomy, role clarity, policy coherence (especially as related to objectives), stakeholder participation/engagement, professionalism (capacity), and transparency. This study identifies seven elements affecting infrastructure performance: institutions...

In addition to implementing Renewable Energy (RE) initiatives, sector regulators also have roles to play in promoting Energy Efficiency since EE can be expanded via utility actions (incentivized and monitored by the regulator) and actions by other agencies. The former include reduced line losses, improvements in load patterns and system reliability...

Although the Japanese water sector is economically and socially important, few empirical studies are available to help analysts and policy-makers understand the performance patterns in the industry. This study applies data envelopment analysis to 5,538 observations of 1,144 utilities that supplied drinking water between 2004 and 2007. With a compre...

This paper considers the institutional and regulatory framework of local infrastructure services in Florida. Furthermore, it examines how decision-makers perceive the governance structures of publicly-owned utilities in this state. After reviewing the theory, the study describes the current system in terms of rate setting, investments, consumer pro...

Six recent publications by the International Water Association underscore the growing importance of quantitative studies of water utilities for identifying (1) performance patterns, (2) trends in key indicators and (3) best practice. Since each author takes a different approach to the problem of performance measurement and incentives for improvemen...

This paper considers the institutional and regulatory framework of local infrastructure services in Florida and examines how decision-makers perceive the governance structures of publicly-owned utilities in this state. It should be of interest to a broad audience, particularly to European practitioners that are unfamiliar with the rules and practic...

This paper updates the literature on water utility benchmarking studies carried out worldwide, focusing on scale and scope economies. Using meta-regression analysis, the study investigates which variables from published studies influence these economies. Our analysis led to several conclusions. The results indicate that there is a higher probabilit...

Several patterns emerge from a review of historical developments in the electricity industry: (1) conflicts arise from a number of sources; (2) responses to events and perceived crises tend to involve national (and state) legislation; (3) a lack of broad public (and political) consensus regarding the appropriate role of market mechanisms vs. govern...

The US high cost loop support (HCLS) program, formerly referred to as the Universal Service Fund (USF), has been a key component of the Federal Communications Commission’s (FCC) program to promote telephone access in rural, high cost areas. This study uses data from 1136 rural telecom firms in 50 states between 1991 and 2002 to test the impact of t...

This paper examines how government regulation in developing countries affects the form of corruption between business customers and service providers in the telecom sector. We match the World Bank enterprise-level data on bribes with a unique cross-country telecom regulation dataset collected by Wallsten et al. (2004), finding that (1) strong regul...

Infrastructure is in need of rehabilitatio n in many developed countries. In emerging countries, water has come to symbolize the huge gaps between promise and performance. The sad truth is that the political economy of water is such that those who make tough decisions will not receive credit during their terms in office. Nevertheless, benchmarking...

This paper considers the institutional and regulatory framework of local infrastructure services in Florida and examines how decision-makers perceive the governance structures of publicly-owned utilities in this state. It should be of interest to a broad audience, particularly to European practitioners that are unfamiliar with the rules and practic...

This paper examines the robustness of efficiency score rankings across four distributional assumptions for trans-log stochastic production-frontier models, using data from 1,221 Japanese water utilities (for 2004 and 2005). One-sided error terms considered include the half-normal, truncated normal, exponential, and gamma distributions. Results are...

Small Island Developing states (SIDs) present challenges for analysts and policy-makers attempting to strengthen island-nation infrastructure. This study applies lessons to one SID to illustrate how benchmarking can improve the performance of water utilities. The archipelago-nation of Cape Verde is characterized by severe water scarcity and relativ...

Utility subsidies are often defended as promoting universal service. However, specific support formulas may be poorly targeted and/or designed. The U.S. high-cost loop support (HCLS) program (formerly referred to as the Universal Service Fund (USF)), has been a key component of the FCC's USF program. With proposed initiatives for universal access t...

No abstract available.

Lynne Holt, Ph.D., is a Policy Analyst for the Public Utility Research Center (PURC) at the University of Florida. For PURC, she has helped organize meetings and has written on energy, telecommunications, and water policy issues. She is also affiliated with the Bureau of Economic and Business Research and the Askew Institute on Politics and Society...

This article examines how risk is reflected in infrastructure regulatory contracts, using examples from water utilities to illustrate key points. Partnerships between public and private sectors in capital intensive network services require risks to be assigned to the contractual party that is better able to mitigate them or to bear them. After iden...

This paper performs a literature update of quantitative studies of water and sanitation services (WSS). There are 190 studies which use cost or production functions to evaluate the performance of WSS utilities. The studies examine (1) the scale, scope or density economies of utilities in a particular country or region, (2) the influence of ownershi...

This paper analyses regulation by contract in public-private partnerships (PPPs) for infrastructure services. Although the benefits of competition for the market and subsequent regulatory contracts are recognized, the literature also identifies contract design failures. When considering these limitations, it is useful to distinguish between contrac...

Economic theory suggests that price incentives can be used to encourage water conservation in residential consumers. Conservation water rates are designed to send price signals that encourage households to reduce discretionary water use in the long term. However, it is not always clear that conservation rates effectively provide meaningful incentiv...

We examine three case studies regarding the assessment of market competition in telecommunications: The finding by the U.S. Federal Communications Commission that AT&T was non-dominant in the U.S. long distance market in the early 1990s; The finding by Ofcom in the United Kingdom that each mobile network operator possessed significant market power...

Considered the cutting edge of microeconomic theory in the 1970s, natural monopoly research remains an active and fertile field. Policy makers and regulators have begun to implement entry and pricing policies that are based on theoretical and empirical analyses. This book develops a comprehensive framework for analyzing natural monopoly. The author...

This study provides a comprehensive efficiency analysis of water service providers in six countries in the Central American region. Pressures for sector reform have stimulated interest in identifying and understanding the factors that can contribute to network expansion, improved service quality, and cost containment. The aim is to provide policy-m...

Marcu for many helpful comments. We gratefully acknowledge financial support from the NET Institute (www.netinst.org) and the Kauffman Foundation.

This paper evaluates regulation by contract in public-private partnerships (PPPs) in infrastructure services. Although the benefits of competition for the market and of regulatory contracts are widely acknowledged, the literature indentifies several failures in their design. These ‘flaws’ are present in both developed and developing countries and a...

This study briefly surveys contributions to our understanding of performance-drivers in infrastructure sectors. One task facing analysts and policy-makers involves evaluating the impacts of particular features of regulatory institutions. Here, particular attention is given to methodologies for evaluating regulatory agencies, since regulatory govern...

Most electric utilities still rely on “dumb grid” technology to meet and manage load. Yet the passage of the federal Energy Policy Act of 2005 and the 2007 Energy Independence and Security Act (EISA) has provided greater visibility for smart meters, an essential component of smart grid systems. Increasing federal support through the provision of $4...

Water service to the urban poor presents challenges to political leaders, regulators and managers. We identify technology mixes of yard taps, public water points (with and without pre-paid meters) to meet alternative constraints, and reflecting populations served and investment requirements. Three investment scenarios have different implications fo...

Networks of sectoral regulatory agencies provide regional public goods (RPGs). In developed and developing countries, the telecommunications, energy, and water sectors have been re-structured (frequently liberalized) and reformed over the past two decades. Often with seed money from international organizations and donor countries, regulatory leader...

Regulators can utilize a number of alternative methodologies for comparing firm efficiency, but these approaches need to be robust to be accepted by stakeholders. This study evaluates the consistency of water-utility performance rankings for Peruvian water utilities. The results indicate that data envelopment analysis (DEA) and stochastic frontier...

Yardstick regulation requires the utilization of benchmarking, a valuable tool for improving the public service delivery, especially in developing countries where inefficiencies translate into negative health impacts and social unrest. However, research must account for both cost and quality of service. Using data from 38 Peruvian water utilities (...

Performance monitoring based on outputs (customers served, volume delivered, and service quality) has characterized oversight agencies in the water sector. However, Micromanagement and burdensome reporting schemes can curtail operational innovation and creativity. However, in situations where managers lack full operating knowledge and capacities, p...

Those responsible for utility operations can only manage what they measure, so having information on productivity trends and relative performance enables utility managers to direct attention to shortfalls. Similarly, policy-makers require quantitative analyses in order to identify utilities with strong and weak performance. Examples from Central Am...

The achievement of Millennium Development Goals (MGDs) by 2015 requires significant managerial innovation and creativity, especially in low-income countries where utility inefficiencies are still prevalent. This paper describes approaches that have been used in Uganda's National Water and Sewerage Corporation (NWSC). We outline the potential for in...

Specialists should focus on creating various preconceptions and perceptions for effectively dealing with the water issues globally. Engineers should be given adequate funds to develop and integrate new approaches to promote sustainable systems and introduce solutions to water scarcity, energy issues, and environmental problems. Ecologists study the...

The water sector has economic and symbolic importance for citizens in developing countries. Water utility benchmarking is no panacea for improving water sector performance. Nevertheless, it can contribute to addressing four sources of conflict in the design and implementation of policies: cognitive conflicts (based on technical disagreements regard...

Infrastructure for developing nations raises concerns regarding citizen access, affordability, service quality, and network expansion. Historically, state-owned enterprises have tended to provide water service services, but performance has not been strong. However, public provision of water utility services can be efficient when management follows...

There remain important gaps in our understanding of the various instruments that can be used to mitigate regulatory risk. Tradeoffs between predictability and flexibility and between independence and accountability raise issues. Arguably, there exist situations where policy flexibility is needed to lower risk or increase expected returns on investm...

There are three basic approaches to mitigating this risk; namely, institutional instruments that limit the possibility of government opportunism, financial instruments that decrease financial risk, and investment strategies, such as choosing technologies that may not be cost-minimizing but that have lower “sunk” costs than more traditional alternat...

Both ownership and regulation affect the behavior of utility managers. Private ownership rewards managerial decisions that enhance shareholder value. Regulatory incentives reward behavior that affects profits and costs. An empirical analysis of 24 Ukraine electricity distribution companies from 1998 to 2002 indicates that privately owned firms do r...

It can be argued that there are four sources of conflict in policy development and implementation: cognitive conflicts (based on technical disagreements regarding how scientific data might be interpreted), interest conflicts (where stakeholders obtain different benefits and costs under alternative policies), values conflicts (involving ideology or...

The structure, conduct, and performance of Chinese telecommunications are analyzed to determine reform's impact on policy objectives. Recent performance suggests that a more comprehensive reform is needed. However, China's fragmented policy environment makes large-scale reform difficult. Further deregulation of the telecommunication industry requir...

The significant efficiency improvements made within Uganda's National Water and Sewarage Corporation (NWSC) through performance monitoring are discussed. The improvements include reducing unaccounted-for water from 51% to 39% and increase of water service coverage from 48% to 63%. To encourage performance improvement, NWSC is currently applying a m...

A number of short-term initiatives involving private sector participation that have helped to improve the performance of Uganda's National Water and Sewerage Corporation (NWSC) are discussed. A programmed was designed for reduction in burecracy, increased worker involvement and self-confidence. It is found that tropies were awarded to those utiliti...

A number of perceived risks stand in the way of private participation in infrastructure. Attracting credible private operators in developing countries is difficult, since investors face the following stubborn facts: the market is small, political risks are high, and citizens are especially sensitive to changes in institutional arrangements, even wh...

Co-utilization of domestic fuels (CDF) represents a promising portfolio of new production processes and inputs. However, new technologies are unlikely to be adopted unless prototype testing demonstrates the efficacy of creative approaches to blending fuels. Beyond the R&D stage, utilities transforming inputs into useable energy must be convinced th...

Resumen Todas las formas de regulación proporcionan incentivos. Los incentivos, las asimetrías de información, y los problemas de agente principal afectan en su totalidad al rendimiento de la empresa. La regulación del costo del servicio (tasa de retorno) presenta una oportunidad para cubrir los costos. También proporciona a las empresas el incenti...

Benchmarking is one of several regulatory tools to encourage continuous improvement of water utility operations and to evaluate utility performance. Regulators of water utilities can use benchmarking, in conjunction with incentive regulation, to reward efficient utilities that provide high quality service. However, benchmarking requires careful pla...

Past conditions in the electricity sector (technology, demand, information access and ownership) led to state and federal regulation. Changes in those basic conditions have caused policymakers to change the rules to facilitate the introduction of competition into generation. Yet, actual industry performance under deregulation is causing us to revie...

Nations have established independent regulatory commissions as elements of the reform process. As countries privatize or encourage private participation in infrastructure, policymakers need to signal investors that the time horizons for policy extend beyond the next election. This article outlines how the system of regulatory governance is a major...

Regulators frequently face difficult economic trade-offs in their decision-making. They must know how to assess the effects of policies on stakeholders under conditions of imperfect information. Part of the art of regulation revolves around understanding the linkages between choice of market structure, design of regulatory rules, and institutional...

The role of the state changed in Latin American and Caribbean countries between 1985 and 1995 as eight regulatory commissions were created (for the 19 countries in our regional sample). This institutional innovation was part of the liberalization process that has permeated the hemisphere. This study examines the determinants of telephone lines per...

The art of regulation involves establishing rules that allocate value to consumers and suppliers in such a way as to maintain incentives for the firm to create value, while promoting political legitimacy in the eyes of consumers and other stakeholders.

The purpose of this paper is to provide an overview of developments in best practice regulation. Since the Public Utility Research Center, in collaboration with the World Bank, has put on six International Training Programs on Utility Regulation and Strategy over the past three years, we have worked on this topic on an intensive and regular basis....

The last decade has seen a worldwide shift towards greater private participation in the infrastructure industries. Most governments are reducing their roles as owners and operators of facilities, causing new emphasis to be placed on their ability to establish sustainable regulatory arrangements. Successful agencies promote credibility with investor...

v CHAPTERS 1 INTRODUCTION 1 2 MORE IS LESS? REGULATION IN A RENT SEEKING WORLD 4 Introduction 4 The Model 6 Central Findings 13 Conclusion 23 3 DETERMINING THE RULES OF THE GAME: REGULATORY REGIME ADOPTION IN THE U.S. TELECOMMUNICATIONS INDUSTRY 25 Introduction 25 A Simple Model of Regulatory Regime Adoption 28 The Empirical Model 43 Conclusion 58...

The last decade has seen a worldwide shift towards greater private participation in the infrastructure industries. Most governments are reducing their roles as owners and operators of facilities, so managers, employees, customers, government officials, and other stakeholders are confronting new issues. In particular, governments must establish sust...

Electric power developers considering global investment opportunities and risks must consider how a regulatory regime will shape and constrain decisions related to prices, returns, and other variables. Successful regulators will seek to promote credibility with investors and a sense of fairness in the eyes of the public, while delivering greater ef...

Any survey of such a dynamic industry as telecommunications is bound to be idiosyncratic - reflecting the particular tastes and interests of the reviewers. We do not apologize for selectivity, but wish to acknowledge that another team could review developments in telecommunications policy and present a very different set of observations. We focus o...

Some might argue that the term 'incentive' in incentive regulation is redundant. Government intervention by definition establishes a system of rewards and penalties for private decision-makers. The resulting incentives can be dysfu nctional, but regulation cannot help but create incentives of some type. Clearly, regulation affects behaviour, as evi...

The electric utility industry is in the process of adjusting to the 1992 Energy Policy Act, recent Federal Energy Commission Orders, and other developments in energy markets. Structural and regulatory proposals are being considered (or have been adopted) in a number of states. At the federal level, the Federal Energy Regulatory Commission (FERC) co...

The last decade has seen a worldwide shift towards greater private participation in the infrastructure industries. Some governments are reducing their roles as owners and operators of facilities, causing new emphasis to be placed on their ability to establish sustainable regulatory arrangements. Successful agencies promote credibility with investor...

The links between incentive regulation and telco performance are complex. This survey of recent research briefly reviews empirical studies of the causes and effects of new regulatory initiatives to promote modernization, price reductions and cost containment. Given the importance of this topic, the strengths and limitations of the first generation...

The continued coexistence of small, publicly owned electricity utilities and larger privately owned utilities suggests that each ownership form has advantages inherent in scale and/or the acquisition of inputs. This pattern may be due to voters being better monitors in small jurisdictions, which yields more effective municipal cost control. This em...

Neoclassical economics, the dominant economics paradigm, has influenced and been influenced by developments in regulated industries. We identify major theoretical and empirical accomplishments, discuss the impact of these accomplishments on policy development, and list the channels through which the impacts are made possible. We then discuss regula...

Some policy makers have proposed using the customer bill to measure a utility's success at implementing a least-cost plan, including its demand-side management program. Use of a bill index results in imperfect incentives and unfair comparisons, and should be rejected performance index.

Is the incumbent local exchange carrier (LEC) a natural monopolist? The analysis indicates that the LEC cost function is not supportable: LECs appear to be either nonsustainable natural monopolies or nonnatural monopolies the set of services they currently offer. However, recent technological changes suggest that whether LECs are natural monopolies...

Price cap regulation is replacing traditional rate of return regulation in a number of jurisdictions. This development can be viewed as a regulatory mechanism facilitating the transition from monopoly to competitive markets. However, multiple goals cannot be achieved via a single instrument. Pure price caps have been modified to better meet the mix...

This note re-estimates our model of the determinants and impacts of cost component incentive regulation using an improved data set which avoids double-counting firm observations. It also tests alternative specifications of the relationships. While cost component incentive regulation improves engineering efficiency (heat rates), it does not improve...

Regulators of utilities that operate as local monopolies would like to set prices or allow rates of return based upon the quality of a utility's service. However, quality is highly multidimensional. Traditionally, regulators have collected measures of quality on many separate dimensions, and compared performance on these dimensions to explicit pass...

This paper gives empirical results regarding the determinants of electricity consumption in manufactured housing, commonly called mobile homes. The data consist of a random sample of over 400 Florida electricity consumers - with information on socioeconomic characteristics, housing features and monthly kWh consumption. The model explains over 40% o...

This article outlines the economic principles necessary for understanding the issues of cross-subsidization and price predation using a series of straw men, or myths, involving regulatory costing and pricing. It is shown that to ensure that a firm is not cross-subsidizing it is sufficient that each product individually and every possible subset of...

Telephone service quality is an important but understudied aspect of industry performance in response to industry performance in response to new technological opportunities and a new regulatory environment, we must be able to measure quality over time (and across firms), evaluate the many dimensions of service quality in terms of some objective fun...

The halving of crude oil prices from 1985 to 1986 has taken pressure off energy policy-makers. Forecasted price increases have not been fully reflected in public perceptions of policy priorities. In Florida the Governor's Energy Office supported an energy modeling effort which provides a baseline for the development and evaluation of energy policie...

This empirical study examines the determinants and impacts of incentive regulations introduced by utility commissions in the late 1970s and early 1980s. Rewards for generating plant utilization and low heat rates were found to have been introduced in states whose firms exhibited relatively high managerial slack (or relatively higher costs). However...

Econometric models can provide national and state policy-makers with frameworks for evaluating past developments and formulating future energy policies. This study models energy consumption in the residential, commercial, industrial and transport sectors of Florida. Own-, cross-price and scale elasticities are estimated for major energy types. Twen...

Incluye bibliografía