Jan, 2020 – For regulated entities, lumpy investments in electricity and gas infrastructure lead to a sudden expansion in the asset. This increase is not always matched with a commensurate rise in transported electricity or gas volumes. Demand may take time to grow in which case these investments can result in sudden tariff increases for network users and consumers with no immediate benefit in return. This can apply to the development of new networks, expansion of existing networks, development of LNG terminals or investments in interconnectors. Many regulatory regimes around the world are ill-equipped to deal with these price spikes. Drawing on our international experience, we highlight four approaches that could be adopted to smooth tariff profiles in the wake of large investments or lower than expected demand. READ ECA’s VIEWPOINT HERE