REGULATION OF NATURAL MONOPOLIES | Projects

Castalia develops tailored approaches to regulate natural monopolies and advises firms on strategies to mitigate regulatory risk and maximise the value of regulated assets
  • Review of Powerco’s Gas Distribution Tariffs, New Zealand
    New Zealand’s Commerce Commission issued a draft determination cutting Powerco’s gas distribution tariffs by 42 percent. Castalia was engaged by Babcock and Brown Infrastructure, Powerco’s owner, to develop a strategy in response. We helped Powerco to address the Commission’s specific concerns, and to highlighting the public interest in continued investment in gas distribution. We also pointed out errors in the Commission staff’s calculations. Our worked contributed to a substantial roll-back of the proposed cuts, with the final decision being to reduce tariffs by only 10 percent
  • Explanatory Notes on Water Regulation, World Bank
    The World Bank put together explanatory notes to address confusion about the meaning of regulation in the context of water supply and sanitation services. Castalia help to draft the explanatory notes, clarifying the role of independent regulators and economic regulation to effectively address specific issues in providing good quality water and sanitation services at reasonable prices. The explanatory notes can be accessed here [PDF]
  • Review of Electricity Tariffs, Tonga
    Castalia acted as an outsourced electricity tariff regulatory staff for the Government of Tonga. We are called on when needed to analyse the pass-through of fuel costs and to periodically adjust the non-fuel components of the tariff
  • Review of Asset Base and Capital Expenditure Plan of Water and Sewerage Authority, Trinidad and Tobago
    The water utility in Trinidad and Tobago proposed a capital investment plan in excess of US$1.6 billion over the next five years. The Regulated Industries Commission engaged Castalia to carry out an independent assessment of this capital expenditure plan and asset base. We found only 30 percent of the proposed plan had been shown to meet the regulatory criteria. The Commission accepted our findings.
  • Review of Transmission Investment, New Zealand
    Transpower—New Zealand’s National Grid operator—proposed a new 400Kv transmission line to supply Auckland, New Zealand’s largest city. The electricity regulator initially rejected the proposal. Castalia worked with Transpower to strengthen the economic case  for the line by incorporating the benefits resulting from foreign direct investment. Following receipt of the submissions, the regulator reversed its decision and approved the line.
  • Regional Regulation of the Electricity Sector, Eastern Caribbean
    The members of the Organization of Eastern Caribbean States face a central problem in the high costs of electricity services. While some of the factors that result in high prices are out of the control of the member states, some factors (for instance, poor fuel efficiency) could be dealt with through improved regulation. Castalia assessed the feasibility of regional regulation and determined that cooperating regionally was feasible and desirable. We designed a regulatory body and advised on how to make unit operational.
  • Southern Africa Regulation of Cross-boarder Power Trading, World Bank
    Southern Africa is grappling with severe power shortages despite having some of the world's most abundant resources for power generation. This situation is a high priority concern for governments in the region. Castalia has been engaged to help these governments understand the role that national electricity regulators can play in facilitating cross-border power trading, in fulfilling their mandate under national legislation to protect domestic consumers and encourage efficient sector development
  • Electricity Networks Regulatory Price Review, Australia
    Jemena Electricity Networks needed assistance with their five yearly price review by the Australian Energy Regulator. Castalia helped complete the regulatory and financial modeling contained in the company's regulatory proposal. Castalia is also helping prepare the company's submission following a draft price determination
  • Vanuatu Concessions Tariff and Service Level Review, The Utilities Regulatory Authority
    The Utilities Regulatory Authority (URA) was established as Vanuatu's electricity and water regulator in 2007. Castalia was engaged to help the URA tariff review for all water and electricity concessions in Vanuatu, and to develop the methodology to perform this review. This work also included building the skills and technical capacity of URA to enable it to effectively manage and administer Vanuatu's concessions.