Resource Rent Taxation and Benchmarking
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Date
2009-08Type
- Working Paper
ETH Bibliography
yes
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Abstract
The electricity generation in Switzerland is mainly based on hydropower (55% of total production). The exploitation of water in the hydropower sector can generate significant
so-called resource rents. These are defined by the surplus return above the value of capital, labor, materials and energy used to exploit hydropower. In Switzerland, hydropower producers pay
to the State a fixed fee per kW gross capacity. With this system the substantial differences in costs, revenues and in the production characteristics of the hydropower plants are not taken
into account. In this context, the following paper has two main goals: 1) To discuss the introduction in the Swiss hydropower sector of a new payment system based on a resource rent tax; 2)
To propose a combination of a RRT system with a benchmarking analysis of the production cost obtained through the estimation of a stochastic frontier variable cost function. We estimate a
true random effects stochastic frontier variable cost function using panel data in order to overcome the asymmetric information problem. In addition, using the information on cost efficiency
of the single companies, we show how to introduce in the RRT scheme a benchmark system which gives incentives to minimize the production costs. Show more
Publication status
publishedJournal / series
CEPE Working PaperVolume
Publisher
CEPE, Centre for Energy Policy and Economics, Swiss Federal Institute of TechnologySubject
Resource Rent Taxation; Hydropower; EfficiencyOrganisational unit
03539 - Filippini, Massimo / Filippini, Massimo
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ETH Bibliography
yes
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