Deregulation of utility industries and roles of simulation

The authors describe why and how different types of simulations can be used to understand and support the challenges of utility deregulation. They present an overview of liberalization and deregulation efforts in three utility markets - electricity, natural gas, and drinking water - and describe the main challenges and opportunities for regulators and business managers. A general classification of seven different types of simulation is presented, including market simulations, policy simulations, dynamic business simulations, capability simulations, day-in-a-life simulations, performance simulations, and gaming simulations. The authors reflect on the role of these simulations for utility deregulation and give examples.