In the regulatory process, the contracts are often imperfect because of the asymmetric information between the government and the regulated natural monopoly firms. For example, there is an obvious problem of moral hazard in ROR regulation which has been adopted widely by our government now. The paper will use principal - agent theory and mech- anism design methods to do some model analyses for this flaw, and try to put forward incentive schemes in order to restrain the opportunistic behavior for the regulated firms. It will also offer some referrenccs for the regulatory reform in the natural monopoly industries of our country.