The Status Quo Of EU Transmission And Distribution Prices

- Nov 09, 2017 -

The electricity transmission and distribution prices in the EU electricity market are divided into transmission prices and distribution prices, which comprehensively show the transmission costs and distribution costs of the grid enterprises. Although ERGEG has made provisions for the approval and regulation of transmission and distribution tariffs in EU countries, due to the large disparities in electricity markets in various countries, various countries have also formulated transmission and distribution tariff mechanisms that are in line with the actual conditions in their respective countries. This led to the EU differences between transmission and distribution price is very obvious.


Transmission price


Like China, the EU transmission costs also include various costs such as investment and construction, operation, system services, dispatch, network loss and special fees. Only some countries need to be borne by the user, some countries need all or part of the power generation business commitment, very different countries.


According to the report released by ENTSO-E (European Power Grid), of the 34 member states of ENTSO-E, all the transmission costs of 19 countries are borne by the users; the countries that have included the power and load access location factors in the transmission costs 4, respectively, the United Kingdom, Norway, Sweden, Romania; only the power access location included in the cost of transmission of a country, for Ireland. Transmission costs in most countries include network loss and system service fees.


In respect of the regulation of transmission prices, although the EU stipulates some basic principles for the regulation of transmission and distribution prices in various countries, the differences among countries are still quite different.


01 first is the regulatory approach


The RIIO regulatory model in the United Kingdom mainly reflects factors such as contribution to improving transmission service users' service, reduction of technological innovation and long-term costs, incentives to increase productivity, etc. Italy adopts a permissible rate of return on the regulation of transmission tariffs, On-line law, the price of goods used on-line transaction fees law.


02 followed by the assessment of assets


The EU countries all have very different opinions on the valuation methods, parameters and boundary conditions of regulatory assets.


03 the last is regulatory cycle, the nuclear price cycle.


Only one year in EU countries, most countries is 4-5 years, Britain's RIIO regulatory model for the longest, for 8 years. According to the long-term observation of the European power grid, the appropriate extension of the nuclear price period is conducive to regulatory stability and is more conducive to investment decisions on power grids.


Distribution price


The regulation of distribution price is similar to the transmission price. There are also the cost plus method without performance incentive, the return method, the price method with performance incentive, and the online income method. The EU method of determining the basic distribution costs is based on two main aspects: first, determine the actual cost of an efficient distribution company in the industry; second, compare the cost of a certain distribution company with the cost of the industry.


At present, there are nine countries in the EU that use the non-incentive pricing method for distribution prices, two countries have established a cost baseline verification method, 18 countries have adopted an incentive pricing method, and 11 countries have established a cost baseline verification method.

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