The tools available to the regulator are chosen and developed with the type of regulatory environment selected either for all projects within a given regulatory regime, classes or types or projects within that regime, or applied on a project by project basis as long as clear guidelines exist to allow prospective PPP providers to understand which type of regulation will apply to the specific project of interest to him.
Broadly, three types of regulatory regimes can be considered to exist:
- Price or revenue caps
- Rate of return
- Hybrid of first two types
Let's look at each of these in turn: