CEZ Group Energy Transformation and Financial Results
CZECH REPUBLIC: ELECTRICITY DISTRIBUTION - OVERVIEW
OF REGULATORY FRAMEWORK
Regulatory
Framework
Regulatory
period
Π
■ Regulated by ERU (Energy Regulatory Office, www.eru.cz)
■
The main components of regulatory formula for distribution
■ Revenue cap = Operating expenses + Depreciation + Regulatory return on RAB - Other revenues
corrections +/- Quality factor + Market factor
■ RAB adjusted annually to reflect net investments and revaluation trajectory
Regulatory rate of return (WACC nominal, pre-tax) - 6.54% for 2021-2025
Operating costs are indexed to weighted average of wage inflation index and market services price index. In
V. Regulatory period efficiency factor set at 0.2% per year.
-
Quality factor prescribed levels of SAIDI and SAIFI parameters. Maximum bonus or penalisation +/- 4% of
allowed profit. Currently has neutral impact on CEZ Distribuce.
Market factor to reflect unexpected cost which could not had been planned while setting planned values of
allowed costs (e.g. new duties coming from new legislation). Never used by ERU in case of CEZ Distribuce.
5th regulatory period from January 1, 2021 till December 31, 2025,
Main focus:
- lowering allowed costs compared to the previous period (reflecting actual costs in the previous regulatory period);
- pressure on quality and security of electricity distribution (prescribed SAIDI and SAIFI parameters);
-
renew and develop the networks incentivised by reasonable regulation parameters.
Unbundling &
Liberalization
Since January 1, 2006 all customers can choose their electricity supplier, market is 100% liberalized
■ Prices for distribution regulated as per above, price of commodity is not regulated at all.
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