Transmission System’s Cost and System Use Charging

The primary purpose of determining the Regulated Revenue of the distribution activity is to ensure that the Operator recovers the cost of activity that the Regulator deems reasonable for the development, operation and maintenance of the System in order to meet the demand for transmission services and that the Operator has incentives to reduce these costs, improving its efficiency, without downgrading the level of security, the efficiency of the System or the quality of the provided services. The reasonable cost of the Operator is recovered from the users through the Use of System (UoS) Charges, according to the “Methodology for Calculating the Required Revenue of the ESMIE Operator” (Decision RAE 495/2021) and the Management Code of ESMIE (FEK Β’ 4658/22.10.2020 (in Greek)).

The main features of the Methodology for calculating the Required Revenue of ESMIE are:

 

The calculation of the Allowed Revenue (AR):

  • The duration of the Transmission Regulatory Period (RP) is set at four (4) years.
  • Estimation of the Allowed Revenue of the Operator in nominal terms based on, among other things, certified data by a Certified Auditor.
  • Separation of Operating Expenditures into Controllable (in terms of their amount by the Operator) and not Non-Controllable.
  • Provision for the deduction of revenue from other regulated and non-regulated activities, which are not accounting separated.
  • Calculation of the return on employed capital based on a single Weighted Average Cost of Capital (WACC) for the entire duration of the Regulatory Period, nominal (nominal) before taxes (pre-tax), by adopting an “ideal” loan burden.

 

Regulatory Asset Base (RAB) – Special Asset Base – Projects of Major Importance

  • Calculation of Working Capital, as a parameter of RAB, based on a determination study for a reasonable amount to meet the actual cash needs of the Operator (‘lead-lag’ approach).
  • In the methodologies harmonization context related to the implementation of significant investments and the given incentives in order to maximize the benefit that the users derive from the timely completion of these projects, the following are redefined: a) the calculation of the return on the employed capital of the Projects of Major Importance during the construction period and b) the range of prices that this additional return can receive, as well as the years of subsidy based on the respective approved TYNDP.

 

Required Revenue – Adjustments and incentive mechanisms

  • Adjustment of all the Required Revenue parameters to current values.
  • Ex-post evaluation of projects, with provision for inclusion (deduction) from the Required Revenue of the Operator resulting from the activation of the disincentive mechanism for untimely implementation of large projects.
  • Inclusion (deduction) from the Required Revenue of the Operator percentage on profits from Non-Regulated Services to the benefit of the ESMIE Users.

Maintenance of the incentive mechanism for the Controllable Operating Expenditures (OPEX efficiency incentive mechanism) for the Regulatory Period 2022 – 2025, but with a forecast integration for the allocation of the relevant benefit from the cost savings between the Operator and ESMIE users within the Regulatory Period where this benefit is created.

 

  1. c) Based on the approved Required Revenue for each year, the unit prices of the System Use Charges are approved by RAE, which are implemented one month after their entry into force, in accordance with the provisions of Article 140 of law 4001/2011.

The Required Revenue, which corresponds to all Customers, is divided between the Customers connected to ESMIE and the Customers connected to the Distribution Network, depending on the capacity with which they are charged as follows (subsection 9.3 of the reissue of the ESMIE Management Code):

  • The charges corresponding to each Customer directly connected to ESMIE is budgeted on an annual basis and is determined as the product of the Customer’s capacity billing multiplied with the unit charge corresponding to it. The unit charge for each Customer connected to the ESMIE in Euros/MW is the same for the whole country and is defined as the quotient of the Required Revenue distributed to these Customers divided by the sum of their capacities billing.
  • The methodology of distribution of the Required Revenue that is proportional and distributed to the Customers connected to the Distribution Network, the categories of the Customers and the methodology for determining the unit prices of the System Use Charges or the billing invoices of these Customers, as well as the necessary settings included in the System Use Charges Manual for Network Customers of ESMIE Management Code (RAE Decisions 1332/2009 (in Greek) and 2215/2010 (in Greek)). The basic principles of this methodology are the following:
  • the charge of each Customer for the use of ESMIE should reflect, as far as possible, the costs incurred respectively by the operation of the Customer’s facilities in ESMIE,
  • the calculating process per unit level of the System Usage Charge should be simple and understandable for the Customers, and its result should be sufficiently predictable,
  • Customers are included in the Customer Categories depending on the burden they cause to ESMIE,
  • to provide, through charges, incentives to Customers to manage their demand and in particular the fluctuation of their cargo,
  • takes into account the existence or possibility for installing metering devices, which on the one hand allows the most efficient management of the load of each Customer and on the other hand allows for the collection of detailed data on the load characteristics.

 

RAE Acts

Regulatory Period 2018-2021

  • February 2020 – Decision 3/2020 (in Greek) “Approval of the Charges for the Use of the Hellenic Electricity Transmission System (ESMIE)”
  • January 2019 – Decision 100/2019 (in Greek) “Approval of the Required Revenue for 2019 of the Hellenic Electricity Transmission System (ESMIE) Operator”
  • March 2018 –  Decision 235/2018 (in Greek) “Approval of the Allowed Revenue for the Regulatory Period 2018-2021, as well as the Required Revenue for 2018, of the Hellenic Electricity Transmission System (ESMIE) Operator”

Regulatory Period 2015-2017

  • November 2016 – Decision 456/2016 (in Greek) “Approval of the Charges for the Use of the Hellenic Electricity Transmission System (ESMIE)”
  • October 2016 – Decision 404/2016 (in Greek) “Approval of the Required Revenue for 2017 of the Operator of the Hellenic Electricity Transmission System (ESMIE)”
  • December 2015 – Decision 466/2015 (in Greek) “Approval of the Charges for the Use of the Hellenic Electricity Transmission System (ESMIE)”
  • November 2015 – Decision 453/2015 (in Greek) “Approval of the Required Revenue for 2016 of the Hellenic Electricity Transmission System (ESMIE) Operator”
  • December 2014 – Decision 712/2014 (in Greek) “Acceptance of the updated Regulatory Register of Fixed Assets of IPTO S.A. with reference date 31.12.2013 »
  • December 2014 – Decision 711/2014 (in Greek) “Clearance of investments, operating expenses and income from other sales of 2013 of IPTO S.A.”
  • October 2014 – Decision 572/2014 (in Greek) “Approval of the Allowed Revenue for the Regulatory Period 2015-2017, as well as the Required Revenue for 2015, of the Hellenic Electricity Transmission System (ESMIE) Operator”

Previous Decisions

  • April 2014 – Decision 195/2014 (in Greek) “Approval of the Annual System Costs for 2014, as well as the Charges for the Year 2014 for the Hellenic Electricity Transmission System (ESMIE)”
  • December 2012 – Decision 1016/2012 (in Greek) “Approval of the Annual System Costs for 2012 and 2013, as well as the Use Charges of 2013 for the Hellenic Electricity Transmission System (ESMIE)”
  • November 2011 – Decision 1456/2011 (in Greek) “Maintaining the existing Charges for the Use of the Transmission System and the Electricity Distribution Network”
  • December 2010 – Opinion 377/2011 (in Greek) “Annual Cost Budget and Unit Transmission Charges for 2011”
  • December 2009 –  Opinion 501/2009 (in Greek) “Annual Cost Budget and Unit Transmission Charges for the year 2010”
  • June 2009 –  Opinion 177/2009 (in Greek) “Annual Transmission System Cost Budget and Unit Customer System Charges for 2009”

April 2007 – Opinion 137/2007 (in Greek) “Annual Transmission System Cost Budget and Unit System Usage Charges for 2007”