CEER Report on Regulatory Frameworks for European Energy Networks 2020
11 March 2021
Today, CEER publishes its annual report on regulatory frameworks for European energy networks, covering the year 2020. This report analyses different regulatory systems of electricity and gas networks (at the TSO and DSO level) in most EU Member States, Great Britain, Northern Ireland, Iceland and Norway.
Robust regulatory frameworks are essential for the development of energy markets. They promote confidence in market mechanisms and are central in ensuring a level-playing field with sound investment signals for the sector. In most regulatory regimes, the revenue the network operator is allowed to earn is determined by the National Regulatory Authorities (NRAs) based on the network operators´ cost and structural situation.
The report provides a general overview of the regulatory practices in place, the calculation of a rate of return, the determination of the regulatory asset base (RAB) and the depreciation of assets in the different regulatory systems. Some of the main conclusions are:
- For the method of asset valuation, the weighted average cost of capita (WACC) is the preferred method by many NRAs;
- For the RAB, there are some variations among the surveyed NRAs. However, almost all NRAs include fixed assets in the RAB and more than half of the NRAs do not include working capital in the RAB; and
- Straight line depreciation is applied by most NRAs for gas and electricity regulation, but the NRAs use different depreciation values.
The report is accompanied by several separate documents: a summary document, extensive tables in Annex 4 and an in-depth collection of case studies of nine countries found in Annex 5.
Please read the full report, summary and its annexes here.