MAR and Retail Tariff Calculation Example exercise. Andrijana Nelkova Chuchuk

Transcription

1 ERRA Tailr-made Training Curse: Principles f Tariff Regulatin Implemented fr: Oman Pwer & Water Prcurement Cmpany MAR and Retail Tariff Calculatin Example exercise Andrijana Nelkva Chuchuk ERC Macednia www. erranet.rg

2 Methdlgy fr MAR Calculatin Retail Tariff Cntent 1. Methd fr calculatin f MAR 2. Nrmalized csts-targets 3. Tariff structure and allcatin f the revenue 4. Example f a request fr retail tariff apprval 5. Calculatin f MAR and retail tariffs 2

3 Methdlgy fr MAR Calculatin Retail Tariff Maximum Regulated Revenue MARP t = O t + D t + CPT t + E t + TNU t + MO t + DNU t + M t + LC t K t MARt - maximum allwed revenue in the year t Ot - peratinal csts and csts fr maintenance in the year t Dt - depreciatin in the year t CPTt - transferred csts in t he year t Et - csts fr purchasing electricity fr Supply f electricity at Last Resrt in the year t E B t - csts fr imbalances in regards t planned and realized electricity cnsumptin in the year t TNUt - csts fr transmissin f electricity in the year t MOt - csts fr rganizatin and management f the electricity market in the year t DNUt - csts fr distributin f electricity in the year t Мt - margin fr the activity Supply f electricity at Last Resrt, in the year t Lct - liquidity allwance fr the activity supply f Electricity at Last Resrt in the year t Kt - crrectin factr in the year t 3

4 Methdlgy fr MAR Calculatin Retail Tariff Nrmalized csts - divided in 7 grups with targets 1. csts fr material, energy, spare parts and small inventry based n the cnsumptin nrms and average purchase prices in the market in the supplying perid; 2. current maintenance csts, repair and services fr maintenance f assets t 25% f the calculated depreciatin annual rate; 3. csts fr insurance f cnstructin facilities and equipment are apprved in line with the insurance premiums paid by the cmpany; 4. grss salaries per emplyee t the average grss salary level per emplyee realized in the cuntry in the current year, increased t 40%, by means f qualificatin structure and cmplexity f the regulated activity; 5. management salaries and awards in nrmalized amunts equivalent t the efficiency increase and in line with the decisins f the managing authrities f the cmpany; 6. ther services t the level f average three-year participatin (%) in relatin t the csts fr material, energy, spare parts and small inventry (pint 1); 7. ther and extrardinary csts t 10% f the csts given under 1; 2; 3; 4 and 6. 4

5 Revenue allcatin Descriptin Quantities Tariff Revenue Husehlds Other cnsumptin 0,4kV One- tariff meter Tw-tariff meter I Tariff grup II - Tariff grup Public lightening Cnsumers n medium vltage level 10(20) kv Cnsumers n medium vltage level 35 kv Cnsumers n medium vltage level 35 kv Direct cnnectin active electricity , active electricity HT , active electricity LT , active electricity HT , active electricity LT , reactive electricity HT , reactive electricity LT , peak pwer , active electricity HT , reactive electricity , active electricity , active electricity HT , active electricity LT , reactive electricity HT , reactive electricity LT , peak pwer , active electricity HT , active electricity LT , reactive electricity HT , reactive electricity LT , peak pwer , active electricity HT , active electricity LT , reactive electricity HT , reactive electricity LT 0 0,22 0 peak pwer ,

6 Retail Tariff request REQUEST FOR APPROVAL OF THE MAXIMUM ALLOWED REVENUE AND PRICE FOR PERFORMANCE OF THE REGULATED ACTIVITY SUPPLY OF ELECTRICITY TO HOUSEHOLDS AND SMALL CONSUMERS FOR THE YEAR t The Electricity Supplier f Tariff Cnsumers request t the Energy Regulatry Cmmissin t adpt a Decisin fr determinatin f the maximum allwed revenue and price fr perfrming the regulated activity supply f electricity t husehlds and small cnsumers fr the year t. The cmpany has tw licenses, fr electricity distributin and supply f tariff cnsumers MAXIMUM ALLOWED REVENUE (MAR) AND PRICE Prviding f sufficient revenue f the cmpanies that perfrm regulated activities represents fundamental prerequisite fr the stability f the electricity system and the security f the electricity supply in the Republic. In this directin, determinatin f the electricity prices in the manner that will guarantee reasnable cverage f the efficient csts incurred by the cmpanies fr prvisin f regulated services and achievement f cmmensurate return is f exceptinal imprtance. 6

7 Maximum Allwed Revenue OPEX, depreciatin and CPT Energy Transmissin, market and distributin cst Margin MAR Cst fr imbalances Liquid assets Crrectin factr 7

8 INPUT DATA OPERATIONAL COSTS The peratinal csts (О) cver the csts that are necessary fr perfrming the regulated activity. We present the real csts that we expect t achieve in the regulatry perid, as well as their nrmalizatin. Table 1. Operatinal csts Operatinal csts Csts fr Supply Nrmalized csts Nt-recgnized csts Csts fr materials, energy, spare parts and small inventry Csts fr current maintenance, verhaul and services fr maintenance the assets Csts fr insurance f buildings and equipment Grss salaries Number f emplyees 110 Average griss salary Management salaries and management rewards Csts fr ther services Other csts Ttal peratinal csts

9 csts fr materials, energy, spare parts and small inventry prjected values csts fr current maintenance 25% f the amunt f annual depreciatin csts fr insurance insurance premiums csts fr grss salaries fr 110 emplyees per ttal hurs allcated t the activity csts fr ther services previus three-year average share in the csts fr materials, energy, spare parts and small inventry ther and extrardinary csts ther persnnel expenses (hliday payments, allwances and ther persnnel expenses), csts fr training f emplyees, curt taxes, csts fr representatin, etc. Remark: Significant amunt f the csts fr ther services remain unrecgnized fr the cmpany (increase f the efficiency in peratins and utsurcing effects and n the ther hand intrductin f new legal bligatins - csts fr ntary and enfrcement, the csts fr ther services has increased) 9

10 DEPRECIATION The value f annual depreciatin f the assets used mkd. TRANSFERRED COSTS The transferred csts fr the year t are determined t amunt f mkd. Table 2: Csts Passed-thrugh: Year t Regulatry fee, csts fr cncessins, eclgy taxes and prperty taxes, as well as all ther unexpected csts Regulatry fee, taxes and ther cntributins Planned tax accrding State Tax Office Csts fr frce cllectin Revenues related t frce cllectin Other revenues besides the revenues frm perfrming the regulated activity Ttal transferred csts:

11 COSTS FOR PROCUREMENT OF ELECTRICITY Csts fr prcurement f electricity fr Supply f electricity fr tariff cnsumers is calculated by applicatin f the fllwing frmula: E t = E t RG + E t T + E t B whereas: E t - cst fr electricity purchase and service fr electricity transmissin fr retail supply f tariff cnsumers in year t RG E t - cst fr electricity purchase frm electricity generatr in which license bligatin t prvide public service has been defined, in year t T E t - electricity purchase in the pen market by market prices, in accrdance with the Energy Law, in year t B E t - imbalance cst in relatin with planned and realized electricity cnsumptin, in line with market rules, transmissin grid rules and distributin grid rules 11

12 COSTS FOR PROCUREMENT OF ENERGY AND REGULATED SERVICES Electricity purchase Regulated generatr Open market RES - Preferential prducers Electricity price fr cvering the needs f husehlds and small cnsumers at the pen market is planned at 3,16 mkd/kwh Electricity price frm the regulated generatin assumptin t be identical with the valid price f 2,4414 mkd/kwh Quantities - regulated generatin kwh + pen market kwh Result: Е t = kwh * 2,4414 mkd/kwh kwh * 3,5270 mkd/kwh Е t = mkd 12

13 COSTS FOR IMBALANCES IN REGARDS TO PLANNED AND REALIZED ELECTRICITY CONSUMPTION IN THE YEAR t Decisin f the ERC, regulated energy enterprises will nt be calculated fr deviatins f the realized transactins frm the nminated transactins and have n bligatin fr payment f charges. This implies that the cmpany s csts fr imbalances fr the year t are 0. COSTS FOR TRANSMISSION OF ELECTRICITY transmissin csts f electricity prduct f the quantity f the electricity needed fr satisfying the needs f the husehlds and small cnsumers and the tariffs fr transmissin electricity quantities fr husehlds and small cnsumers are kwh transmissin tariff, assumed same t the valid tariff fr the year t-1 transmissin csts fr the year t are calculated in the fllwing way: TNU t = kwh * 0,2715 mkd/kwh TNU t = mkd 13

14 COSTS FOR ORGANIZATION AND MANAGEMENT OF THE ELECTRICITY MARKET prduct f the quantities f electricity and the tariff fr rganizatin and management f the electricity market csts fr rganizatin and management f the electricity market МО t = kwh * 0,0310 mkd/kwh МО t = mkd COSTS FOR DISTRIBUTION OF ELECTRICITY fr crrect determinatin f the distributin csts it is necessary t determine first the distributin tariffs Cnsidering that the distributin tariffs are determined in parallel prcedure with the prcedure that refer t this Request, fr the needs f the calculatin we use the previusly calculated by us and are submitted t the Energy Regulatry Cmmissin fr apprval. 14

15 Table 2. Csts fr distributin f electricity fr the year t Categries f cnnectins Calculatin element Quantities Price f the calculatin element Amunt MV1 Active energy kwh 0,0250 mkd/kwh mkd Reactive energy kvarh 0,0100 mkd/kvarh mkd Maximum pwer kw 54,9444 mkd/kw mkd MV2 Active energy kwh 0,0814 mkd/kwh mkd reactive energy kvarh 0,0326 mkd/kvarh mkd Maximum pwer kw 142,4871 mkd/kw mkd LV1.1 Active energy kwh 0,7060 mkd/kwh mkd LV1.2 Active energy kwh 0,1636 mkd/kwh mkd Reactive energy kvarh 0,0655 mkd/kvarh mkd Maximum pwer kw 143,7718 mkd/kw mkd LV2 Active energy kwh 2,1824 mkd/kwh mkd Ttal mkd Electricity distributin csts are mkd. 15

16 MARGING FOR THE REGULATED ACTIVITY SUPPLY OF ELECTRICITY The margin fr the regulated activity Supply f electricity is calculated by applicatin f the fllwing frmula: whereas: M t M t = μ/100* MARP t - margin fr the activity supply f electricity in the year t μ - percentage f the margin apprved by the ERC MARP t - maximum allwed revenue exclusive f the margin (М), liquidity allwance (LC) and the crrectin factr (К) in the year t MAXIMUM ALLOWED REVENUE EXCLUSIVE OF THE MARGIN (М), LIQUIDITY ALLOWANCED (LC) AND THE ELEMENT FOR CORRECTION (К) MARP t = O t + D t + CPT t + E t + Е B t+ TNU t + MO t + DNU t 16

17 whereas: MARP t O t - maximum allwed revenue exclusive f the margin, liquidity allwance and the element fr crrectin in the year t - peratinal csts and csts fr maintenance in the year t D t - depreciatin in the year t CPT t - transferred csts in the year t E t E B t TNU t - csts fr prcurement f electricity fr Supply f electricity t tariff cnsumers in the year t - csts fr imbalances in regards t planned and realized electricity cnsumptin in the year t - csts fr transmissin f electricity in the year t MO t - csts fr rganizatin and management f the electricity market in the year t DNU t - csts fr distributin f electricity in the year t MARP t = mkd mkd mkd mkd mkd mkd mkd MARP t = mkd 17

18 PERCENTAGE OF THE MARGIN Owners ultimate gal - apprpriate return n the invested capital the main difference between the regulated activity supply f electricity and the ther regulated activities (generatin, transmissin and distributin f electricity) - engagement f significant different asset base the wrking capital are significantly higher and mre vlatile The return - margin shuld be apprpriate fr enabling basic ecnmical mtive and interest fr the perfrmance f the activity Margin shuld include certain risks if fr practical reasns they are excluded elsewhere in the determinatin f the maximum allwed revenue, amng which especially: 18

19 Risk frm inability f payment f the prvided services by the clients bad debts (nn-cllected receivables 8% in the perid f 12 mnths pssible lss f the big cnsumers frm the regulated prtfli f the Supplier that cver their liabilities fr delivered electricity in due date (due t the bligatin/pssibility f ging t pen market) market pening - separate invices fr charging the cnsumers fr usage f the distributin netwrk n apprpriate parameter that will enable liquidity allwance fr the activity distributin f electricity Risk related with the prcurement f electricity significant cmpnent that is ut f cntrl f ur cmpany, i.e. is fully determined by the market develpments and the abilities f the regulated generatr. Risk related t electricity cnsumptin vlatile planning the cnsumptin by its clients in dependence f the cnditins n the electricity market and the reliability f suppliers that are active n the pen market General business risk ecnmic envirnment - unexpected significant changes f the interest rates, currency exchange rate, changes in the fiscal plicy, additinal standards fr prtectin at wrk and prtectin f the envirnment, etc. 19

20 the practice shws that in certain cases the margin fr the supplier can be used als fr cverage f certain csts f peratin that are nt previusly included in the revenue setting fr enabling the cmpany in the year t t achieve psitive financial result, the energy Regulatry Cmmissin shuld determine percentage f the margin fr perfrming the regulated activity Supply f electricity t tariff cnsumers fr the year t f minimum 8,18%. The amunt f the margin shuld be put in crrelatin with the cntrllability f csts by the regulated cmpany: 9,00% 7,00% 5,00% 3,00% 2,00% 3,55% 5,09% 6,64% 8,18% 1,00% -1,00% 0% 25% 50% 75% 100% Nn-cntrllabilty 20

21 MARGIN M t = * 8,18% M t = mkd LIQUIDITY ALLOWANCE The liquidity allwance fr the regulated activity Supply f electricity fr tariff cnsumers is determined by applicatin f the fllwing frmula: Lct = /100* MARP t Lc t - liquidity allwance fr the activity Supply f electricity fr tariff cnsumers fr the year t - percentage fr determinatin f the liquidity allwance fr the regulated activity Supply f electricity at Last Resrt apprved by the energy Regulatry Cmmissin, which cannt be higher than 3.5% MARP t - maximum allwed revenue exclusive f the margin (М), liquidity allwance (LC) and the element fr crrectin (K) in the year t 21

22 significant percentage f nn-cllectin f the receivables we request frm the energy Regulatry Cmmissin t determine percentage fr determinatin f the liquidity allwance in amunt f 3,5%. With applicatin f the values fr MARP t, and the percentage fr liquidity allwance f 3,5%, the result is: Lc t = 3,5% * mkd Lc t = mkd ERC shuld make effrts t enable small adjustments f the recgnitin f nn-cllected receivables n behalf f the existing residual risk. This residual risk can be incrprated in the margin CORRECTION FACTOR K t = (R t-1 MARK t-1 ) * (1 + ir t -1/100 R t-1 - realized revenue frm perfrming the regulated energy activity Supply f electricity fr tariff cnsumers in the year t-1 MARK t-1 - maximum allwed revenue achieved by perfrming the regulated activity Supply f electricity fr tariff cnsumers fr the year t-1, again calculated by acknwledged values instead f frecasted, fr determinatin f the element f crrectin (mkd) Ir t-1 - Average passive interested rate published by the Central Bank fr the year t, (%). 22

23 Basic gal f the crrectin factr is t enable the regulate cmpany t achieve revenue that will nt deviate frm the apprved revenue by the Energy Regulatry Cmmissin fr certain regulated perid crrectin factr enables ex-pst cntrl t the ex-ante regulatin We pint ut that achieving f higher maximum allwed revenue than the apprved by the Energy Regulatry Cmmissin in mstly a result f the increase f efficiency in peratin that is implemented by ur cmpany. the cmpany succeeded t achieve significant savings in the prcedure fr prcurement f electricity thrugh rganizatin f transparent, nn-discriminatry and cmpetitive prcedures which result wit best prices. imprved prcesses fr registering the cnsumers and the sphisticated metering devices cntributed twards prper measurement f the cnsumed electricity in apprpriate perids during the day, wherein the cnsumptin in the perid f validity f high daily tariffs had increased the change f the Tariff System fr selling electricity t tariff cnsumers in which applicatin f lw daily tariffs in the perid frm 13 hurs until 16 hurs is replaced with applicatin f high daily tariffs, additinally increased the difference between the apprved and realized maximum allwed revenue We request frm the ERC nt t apply the Crrectin factr fr the year t-1 because f its ptential cnsequences ver the liquidity f the cmpany 23

24 MAXIMUM ALLOWED REVENUE FOR SUPPLY OF ELECTRICITY TO TARIFF CONSUMERS FOR THE YEAR T The maximum allwed revenue is calculated by the fllwing frmula: MAR t = O t + D t + CPT t + E t + Е B t+ TNU t + MO t + DNU t + M t + Lc t - K t the result is the fllwing MAR fr the year t: MAR t = mkd mkd mkd mkd mkd mkd mkd mkd mkd - 0 MAR t = mkd ALLOCATION OF THE MAXIMUM ALLOWED REVENUE The allcatin f the maximum allwed revenue accrding t the Tariff System fr selling electricity t Husehlds and Small Cnsumers shuld enable adjustment f prices f the calculatin elements in a manner that will enable achievement f the apprved amunt f maximum allwed revenue. 24

25 35 kv - Direct Calculatin elements (C i ) Quantities fr calculatin elements fr the year t (Q ct ) Prices fr calculatin elements (T it-1 ) Q ct * T it-1 Active energy (HT) kwh 2,27 mkd/kwh mkd Active energy (LT) kwh 1,14 mkd/kwh mkd Reactive energy (HT) kvarh 0,56 mkd/kvarh mkd Reactive energy (LT) kvarh 0,21 mkd/kvarh mkd Maximum Pwer kw 920,11 mkd/kw mkd 0 mkd Active energy (HT) kwh 2,85 mkd/kwh mkd Active energy (LT) kwh 1,47 mkd/kwh mkd 35 kv Reactive energy (HT) kvarh 0,74 mkd/kvarh mkd Reactive energy (LT) kvarh 0,36 mkd/kvarh mkd Maximum pwer kw 969,88 mkd/kw mkd 0 mkd Active energy (HT) kwh 3,14 mkd/kwh mkd Active energy (LT) kwh 1,54 mkd/kwh mkd 10(20) kv Reactive energy (HT) kvarh 0,69 mkd/kvarh mkd Reactive energy (LT) kvarh 0,43 mkd/kvarh mkd Maximum pwer kw 748,03 mkd/kw mkd 0 mkd Active energy (HT) kwh 3,48 mkd/kwh mkd Active energy (LT) kwh 1,71 mkd/kwh mkd 0,4 kv - I Tariff Grup Reactive energy (HT) kvarh 0,86 mkd/kvarh mkd Reactive energy (LT) kvarh 0,44 mkd/kvarh mkd Maximum pwer kw 727,18 mkd/kw mkd 0 mkd 0,4 kv - II Tariff Grup Active energy kwh 8,41 mkd/kwh mkd Reactive energy kvarh 1,60 mkd/kvarh mkd 0 mkd 0,4 kv - Public Lightening Active energy kwh 5,42 mkd/kwh mkd 0 mkd Husehlds - Single Tariff Active energy kwh 4,33 mkd/kwh mkd 0 mkd Husehlds - Duble Tariff Active energy (HT) kwh 5,40 mkd/kwh mkd Active energy (LT) kwh 2,71 mkd/kwh mkd Вкупно (Σ Q ct * T it-1 ) mkd MAR t mkd Δt = MARt / Σ Q ct * T it ,91% 25

26 CONCLUSION Prviding f sufficient revenue and stable liquidity fr cmpanies that perfrm regulated activities represents fundamental precnditin fr the security f the electricity system in the cuntry, especially when it refers t the perfrmer f the activity Supply f electricity fr tariff cnsumers which, in terms f pening f the electricity market, shuld guarantee the security f the electricity supply fr the husehlds and small cnsumers. determinatin f the maximum allwed revenue fr perfrming the regulated Supply f electricity fr tariff cnsumers in a manner that will guarantee cverage f the reasnable csts f peratin f the regulated cmpany is f great imprtance fr functining f stable and sustainable electricity sectr. In the essence f every ecnmic activity is the realizatin f return f the invested assets in perfrmance f certain activity. Fr the perfrmance f the activity Supply f electricity fr tariff cnsumers, this return shuld cme as a margin that includes certain risks, such as: risk f nn-regular payment by clients, risk related t the prcurement r cnsumptin f electricity, general business risk, etc. 26

27 Exercise Supply f tariff cnsumers MAR calculatin exercise Maximum Allwed Revenue Descriptin Frmula OPEX, О ($) input Depreciatin, D ($) input Csts Passed-Thrugh, CPT ($) input/calculatin Csts fr energy - regulated generatin, Еt ($) calculatin (4.1*4.2) generated quantities, (kwh) input price ($/kwh) input 0, Csts fr energy - imprts, $ calculatin (5.1*5.2) imprted quantities (kwh) input imprt price ($/kwh) input 0, Csts fr energy frm RES (kwh) calculatin (6.1*6.2) quantities frm RES, (kwh) input RES price ($/kwh) input 0, Transmissin csts, TNU ($) calculatin (7.1*7.2) transmitted quantities (kwh) input transmissin tariff ($/kwh) input 0, Csts fr the market peratr, МО ($) calculatin (8.1*8.2) quantities (kwh) input market peratr tariff, ($/kwh) input 0, Csts fr distributin fr the tariff cnsumers, DNU ($) calculatin (9.1*9.2) distributed quantities (kwh) input distributin tariff, ($/kwh) input 0, MARP ($) calculatin ( ) Margin, М ($) calculatin (6*7.1) margin %, μ (%) input 2,00% 12 Liquid assets, L ($) calculatin (6*8.1) % fr determinatin f the liquid assets, σ (%) input 2,50% 13 Crrectin factr, K ($) input MAR ($) input data RESULTS OF THE ALTERNATIVE CALCULATIONS PRESENTED BY THE PARTICIPANTS 27

28 THANK YOU FOR YOUR ATTENTION! Andrijana Nelkva-Chuchuk W Web: