Offering thorough and defensible quantitative analyses, sophisticated economic modeling, sound financial and economic theory, and comprehensive research backed by years of experience.
We provide expert testimony, support in tariff and regulatory proceedings, contract dispute opinions, calculations of damages and compensation, regulatory agency business plans, network model development, and market demand, tariff, pricing, cost, diligence and feasibility studies.
Our experts acquired a deep understanding of the regulatory process through their involvement in numerous regulated market restructurings and privatizations, working on behalf of both governments and regulated companies. We have provided services to clients in the electricity, water, oil, natural gas, mining, transportation, and milk industries. Dr. Leonardo Giacchino, along with Dr. Jonathan Lesser of Continental Economics, is the author of Fundamentals of Energy Regulation as well as Principles of Utility Corporate Finance.
Services in Regulated Industries are classified in three categories: regulatory and public policy, rate cases, and modeling and forecasting. Click on a topic to expand:
Regulatory and Public Policy
Solutions Economics focuses on all facets of regulated infrastructure industries, using our extensive economic, financial, litigation, and arbitration experience to work through intricate regulatory issues, estimate the value of capital assets and the factors affecting those values, as well as develop smart investment strategies to plan for ongoing market and regulatory uncertainties. Years of experience testifying on regulatory issues in regulatory, state, federal, and international courts provides us with the insight and know-how to provide economic solutions in: broad market restructuring, negotiations and settlement, cost of capital estimations, revenue requirements determinations, regulated assets value and prudence determinations, risk management and hedging strategies, and infrastructure market price and supply forecasts.
We play a fundamental role in establishing and defending regulated rates. First, we are heavily involved in initial proposals, where costs and rates are established. Other crucial roles include designing “alternative” regulatory regimes (such as those that reward regulated firms for increased operating efficiency and service quality), determining whether regulated customers are improperly subsidizing unregulated activities, and evaluating strength of the overall market in which energy supplies may be procured.
At hearings and at trial, we testify as to the methodology and techniques employed, the results of our analyses, and may also rebut the other experts’ findings. In rate cases, accurate and effective analyses, estimation, and forecasting are key. They require the expertise to choose and apply various analytical techniques, as well as a detailed understanding of the broader geopolitical, economic, and industrial landscape. These factors all affect the overall infrastructure industry; thus historical context and acute awareness of current issues and evolving trends are all essential.
Solutions Economics provides services in estimating the revenue requirement, which includes forecasting demand and costs, determining the prudence of major expenditures, measuring depreciation rates and estimating the regulated rate of return. We help with rate and tariff design, carefully evaluating costs, designing appropriate allocation mechanisms, and assisting with the creation of tariffs that promote efficiency, equity and other goals including economic development. We also provide assistance in developing alternative regulatory plans to adjust rates and tariffs for a period of time and thus avoid costly formal tariff reviews while creating incentives for regulated firms.
Our experts have a deep understanding of competitive and regulated markets, and are recognized in the United States and abroad for their contributions to facilitate reform for more efficient markets. Our experts have participated in the design and restructuring of energy and transport markets, have privatized many companies and have also been involved at the post-restructuring stage as consultants for regulators, regulated companies, or generators. We have provided assistance and expertise on the functioning of competitive markets and on a wide variety of regulatory issues.
Informed decisions require an understanding of the changing market conditions that pervade the energy industry. Our experts have an in-depth understanding of market design that impact firm performance, including auction designs and implementation used in wholesale market acquisitions, asset divestitures and purchases, and power supply contracts. Our experts have worked in many countries designing and implementing new rules as part of restructuring efforts or to improve already restructured markets.
Our professionals have helped governments restructure their markets, draft new legislation, develop new regulatory frameworks, and create regulatory agencies. Our experts have worked with lawyers in the development of laws, operating agreements, licenses, directives, orders, contracts and other legal documents that form the regulatory compact when restructuring an industry.
Many countries have divested state-owned assets to the private sector. Our experts have worked for several governments in privatization teams organizing the tender of infrastructure assets in the electric, gas and transport industries. They have also helped bidders understand the regulatory landscape and assess their bids by providing regulatory advice and supporting financial modeling efforts.
As new regulated markets are implemented, either a new regulatory agency should be created or an existing regulator needs to be restructured. Our professionals have been involved in the creation of new regulatory agencies, the consolidation of existing agencies with similar goals, the strengthening of existing agencies that took on additional duties, and the support of new agencies in their first few years. Our experts have also trained regulators and have taught regulators at the at the PURC/World Bank International Training Program on Utility Regulation and Strategy, University of Florida, Public Utility Research Center.
Modeling and Forecasting
Our experts have performed many demand and price studies for almost all regulated industries (except telecommunications). We calculate elasticities and analyze different scenarios to assess price impacts.
Today’s volatile markets require forecasts to address market and regulatory uncertainties. Solutions Economics uses complex tools to create price forecasts—and the accompanying decision processes—to account for these uncertainties.
While many forecasts assume equilibrium conditions, we realize that markets are rarely idealized—we develop demand and supply projections with this knowledge in mind to account for future market and regulatory uncertainties.
Solutions Economics provides clients with strategic risk management: in a volatile market and shifting regulatory environment, a solid understanding and analysis of the risks in investment decisions is paramount, as well as transaction analysis and strategic planning. By assisting clients with these issues, Solutions Economics helps minimize avoidable risk, maximize value from unavoidable risks, and integrate risk analysis into clients’ decision making.