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Incentivizing Continuity of Supply in Sweden

A revenue cap regulation for electricity distribution system operators (DSOs) has been in place in Sweden since 2012. The national regulatory authority for energy, the Swedish Energy Markets Inspectorate (Ei), determines a revenue cap for each network operator for a period of four years. This paper describes the new incentive scheme for continuity of supply that is first applied in the period 2016-2019. Depending on the performance of the DSO, the incentive scheme may result in a reward or penalty on the financial return to the DSO. In the new incentive scheme, the performance of all DSOs at local level is benchmarked to set individual baselines for each company based on the customer density. The performance indicators SAIDI and SAIFI are differentiated between different customer groups, and the indicator CEMIn is introduced. This paper aims to act as reference material and inspiration to others as well as a chance for Ei to receive feedback valuable for future development.