Directions for improving the regulatory mechanism of utility services

Utility services are a strategic sector that plays a central role in safeguarding social welfare, energy security, and environmental sustainability. In Azerbaijan, a state-led model can preserve social stability, yet persistent challenges remain, including aging infrastructure, high losses, rising costs, and limited attraction of private investment. This study uses cross-country comparison and scenario-based modeling to examine three potential development pathways for the electricity distribution sector. The results suggest that a transition to a more sustainable system is achievable not only through tariff increases, but more realistically and manageably through efficiency-oriented incentives and digital modernization.