Analytical Report on Rate of Return Practice for Incentive Based Regulation in District Heating and District Water Supply and Wastewater Treatment Sectors

The objective of this document is to analyse regulatory schemes applied in EU Member States to District Heating (thereafter – DH) sector, district water supply and the wastewater treatment (thereafter - WW) sector, to identify best practices and develop recommendations regarding efficient features of a regulatory return model, in the light of the foreseeable changes in Ukrainian municipal energy regulation, i.e. the introduction of incentive based regulation for the DH and WW sectors.

The tasks of this analytical report are the following:

• Task 1: to provide an analysis of regulatory return models as suggested by international practice over both the District Heating sector and the Water Supply and Wastewater Treatment sector;
• Task 2: to draft relevant paragraphs to be inserted into draft Methodologies on the Formation of Tariffs for Heat Energy Transportation and on the Formation of Tariffs for District Water Supply and Sewage.