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The objective of this primer is to assist energy regulators working in emerging economies with building their understanding and knowledge of key concepts related to depreciation, and to support effective decision making when developing cost-reflective tariffs.
This primer presents key factors affecting allowed depreciation costs as well as alternative approaches and regulatory considerations when determining allowed depreciation in the context of cost-reflective tariffs for regulated entities operating in monopolistic market segments (e.g. network companies).
Background: With funding support from USAID, the NARUC is developing a Cost-Reflective Tariff Toolkit aimed at supporting policymakers, regulators, and utilities on the design and implementation of cost-reflective tariffs through effective engagement of the public and key stakeholders in the decision-making process. The Toolkit consists of several short primers providing practical information and guidance on specific elements and topics of cost-reflective tariffs to utility service regulators in emerging economies.
The paper is based on input received from 21 ERRA Member Organisations from the Natural Gas Markets and Economic Regulation Committee.
Authors: Mr. Mehmet Kürkcü, EMRA, Turkey – Committee Chair and Mr. Viesturs Kadikis, PUC, Lativa – Committee Vice-Chair.
Authors: Rahmatallah Poudineh, Anupama Sen, Bassam Fattouh
As much of the world pushes ahead with the deployment of renewable energy, resource-rich MENA economies are lagging behind. For the region to catch up, new policies are required to remove barriers of entry to the industry and create investment incentives. This paper contends that while the main obstacles to deployment of renewables are grid infrastructure inadequacy, insufficient institutional capacity, and risks and uncertainties, the investment incentives lie on a policy instrument spectrum with two polar solutions:
- the incentive is provided entirely through the market (removing all forms of fossilfuel subsidies and internalising the cost of externalities); or
- the incentive is provided through a full government subsidy programme (in addition to the existing fossil fuel subsidies).
However, there is a trade-off between the two dimensions of the fiscal burden and political acceptance across the policy instrument spectrum, which implies that the two polar solutions themselves are not easily and fully implementable in these countries. Therefore, we propose a combinatorial approach in which the incentive for renewables deployment is provided through a partial renewable subsidy program and partial fossil fuel price reform in a way that balances the fiscal pressure on the government against political acceptability. Additionally, the paper argues that the fact resource-rich countries are behind advanced economies in electricity sector reform gives them a last-mover advantage in the sense that they can tap into years of international experience to avoid design mistakes and create a sustainable solution that is compatible with renewables deployment and their own context.
Recording of the ERRA webinar (February 10, 2021) dedicated to gathering and drawing conclusions from impacts observed after 1 year by TSOs and DSOs and also consultants, researchers and regulators. Topics discussed:
- Data analysis of COVID-19 energy market impacts
- The impact of COVID-19 on global power markets
- Assessing the impact of COVID-19 on energy market forward price curves, and effect on investor behaviour in the medium term
- Impact on distribution systems
- COVID-19 reversing progress on energy access in Africa
- Impact on LNG markets
- COVID-19 impact on the energy sector and prospects for impact on energy transition
This paper comprises two parts. In the first section the implemented reforms and achievements as well as existing challenges of Georgian energy sector are discussed from modern and historical perspective. Paper is focused on one of the key acute issues such as energy balance, level of electrification and gasification, utilization of energy resources, energy efficiency, environment and regulation of sector.
The second section envisages the essential issues and activities necessary for the development of Georgian energy sector, in particular, energy security, optimization of energy balance, establishment of competitive energy market, energy saving, environment protection and external cooperation. Justified opinions and proposals needed for the improvement of energy sector regulation are also envisaged by this paper.
The main contents and results of the survey:
- Background and role of NRAs.
- The contents and results of the survey.
- The share of RES in total electricity production:
- The individual targets
- Supporting Systems for RER
- Additional measures
- Duties and activities
- Challenges and barriers
- Most important technologies and services
The paper is based on input received from 28 members organisations!
Authors: Mr. Harald Proidl, E-Control, Austria – Committee Chair and Mr. Mustafa Celebi, EMRA, Turkey – Committee Vice-Chair.
ERRA's internal survey on e-mobility elaborates on the following topics:
- legal/regulatory framework for e-mobility;
- current status and plans regarding deployment of electric vehicles and the related infrastructure;
- electricity system effects of e-mobility;
- role of the NRA regarding e-mobility.
The key findings of the issue include the analysis of the feedback provided by 15 ERRA Members coupled with conclusions and policy recommendations.
ERRA would like to deeply thank dr. Gábor SZÖRÉNYI, former ERRA Chairman and former ERRA General Secretary, who led the drafting efforts to complete the report.
See the presentation by Mr. Nick Haralambopoulos – the Director of Economic Consulting Associates (ECA) – who lead the drafting team dedicated for developing the Study on Regulatory Approaches to Revenue Setting for Electricity Transmission and Distribution System Operators among ERRA Member Organizations. In his delivery, Mr. Haralambopoulos describes key findings of the report and provides insights on how the analysis was conducted.
The TSO/DSO revenue study provides a comprehensive overview of the cost and revenue determination of regulated electricity transmission and distribution system operators, and their subsequent adjustments, among a sample of 20 ERRA Member Organizations (MOs). The analysis is complemented with insights on regulatory governance regimes in place and overall frameworks for tariff setting applied by MOs for the regulated entities. The report is based on a detailed questionnaire through which the authors extracted the targeted information and data from the MOs. In the main part of the study, the authors provide a benchmarking analysis in order to present the findings in graphs and tables and point out the solutions that are applied for a given regulatory issue together with specific indicators/ models and the values defining them in particular regulatory context. This is further coupled with general regulatory insights on applied methods with necessary theoretical descriptions, pointing out examples of best practices among the sampled MOs. The report is concluded with an identification of general tendencies in the development of regulatory frameworks among MOs as well as possible areas of improvement.
Core chapter breakdown is as follows:
- Regulatory governance
- Overall tariff framework
- Cost and revenue determination
- Other revenue determinants
- Revenue adjustments
The Study was prepared in collaboration with ECA - Economic Consulting Associates.
In the podcast Zsuzsanna Pató, Senior Research Associate, Regulatory Assistance Project (RAP) looks at the New Energy Policy Package for 2030. Headlines of the podcasts are: more market, more regionalisation, more demand side resources and more active customers.
Over the past few years, states across the country have seen increased consumer adoption of electric vehicles (i.e., vehicles with an electric motor, or EVs), thereby increasing electricity demand from the transportation sec-tor. This change is quickly becoming a trend, which provides utilities with an opportunity to increase electricity sales while providing customers with the possibility of lowering emissions and overall vehicle ownership costs compared to traditional internal combustion engine (ICE) vehicles. Electric utilities are at different stages of ex-ploring their role in both building EV charging infrastructure and managing grid impacts, including through rate design and managed charging. As a result, many Public Utility Commissions (PUCs), the state agencies tasked with regulating utilities, are being asked to make decisions in this unfamiliar industry, sometimes without direct legislative guidance.
This issue brief provides data about the trends in EV adoption, a synopsis of the types of decisions Commissions are facing, and examples of recent State regulatory approaches to EV questions.