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Gas distribution

Regulated Gas Revenues

The year 2009 is the first year of the third regulatory period (2009-2012) for setting tariffs for gas distribution and metering. The tariff regulation of reference for this four-year period, approved with AEEG ARG/gas resolution 159/08, envisages a marked discontinuity compared to the previous regulatory period in a number of respects. First of all, the criteria for determining permitted revenue levels have been changed. The Net Capital Employed, based on the tariff remuneration, and the relevant amount hedging depreciation costs, now undergo valuation on the basis of the historical stratification of the actual investments made, properly identified depending on the asset’s history, whereas the amount hedging operating costs is based on unitary costs AEEG sets for classes of companies identified by the size and density of the customer base served. Secondly, the principles of interpreting revenue levels on the end tariff applied to the users have been radically changed, on the one hand with introduction nationwide of only six macro tariff zones, and on the other with the establishment of the revenues Tariff Equalisation. This is a system of reciprocal compensation between the operators through the Equalisation Fund in order to guarantee each distribution company the revenue levels expressed by its enterprise restriction. Another consequence of the Equalisation is the new tariff method. Pursuant to ARG/gas resolution 159/08, it makes company revenues independent from the amount of gas distributed, sterilising – for example – every effect tied to climatic trends and in this way ensuring greater stability for the revenue flow. Finally, the new regulatory period envisages surpassing the gas year and aligning the solar year in updating and applying tariff levels starting from 1 January 2009. 

For 2009, the regulatory framework for revenues from gas distribution today appears to be as innovative as it is still uncertain in terms of economic results. With ARG/gas resolution 79/09 of 30 June 2009, AEEG indeed postponed approval of the revenue levels for 2009 to the second half of the year, as opposed to the provisions of ARG/gas resolution 159/08 that required the tariffs of reference to be published by 30 June 2009. In this sense, the tariff revenue levels pertaining to 2009, and in particular to the first half, are still uncertain as of today.

Moreover, AEEG has characterised the same first half of 2009 as a transition period, setting for it a extension in applying tariff options in effect as at 31 December 2008 and approved for Gas Year 2007-08. ARG/gas resolution 79/09 also not only approved the Compulsory Tariff for the second half of 2009, but establishes that application of the 2007-08 options made during the first half must be final in nature, without the need for adjustment to the users, although referring to the Tariff Equalisation for finalisation of the real revenues pertaining to the entire year 2009.

In the picture described above, gas distribution revenues for the first half of 2009 amounted to Euro 76.9 million, with distribution volumes of 1,256 million of cubic metres, with a corresponding unit return of Euro cents 6.12 per cubic metre.

Compared to the first half of 2008, not including Marche Multiservizi, revenues increased by about 22% (going up from Euro 62.8 to 76.9 million) despite the change in distributed volumes was all but negligible (down 1%, from 1,269 to 1,256 million cubic metres). This appreciable increase is circumscribable only to the first half 2009, and is basically justified by changing over from the gas year to the solar year, with consequent zero setting of the consumption brackets as at 1 January 2009, associated with the variable portion of the tariff, compared to a first semester 2008 situation with zero setting of brackets as at 1 October 2007 (gas year 2007-08). In this way, the bracket tariff structure based on varying amounts decreasing as consumption increases leads to a increased average unitary revenue, measured compared to the first half 2008, of approximately 24%, going up from Euro cents 4.95 to 6.12 per cubic metre. The values provided above secondarily also take into account a precautionary estimate of the tariff equalisation effects.

Taking into consideration also Marche Multiservizi in the consolidation perimeter as at 30 June 2009, it should be noted that the consolidated value of revenues from gas distribution and metering for the Hera Group amounts to Euro 83.5 million, for 1,350 million cubic metres distributed and a corresponding unit revenue of Euro cents 6.2/cubic metre.

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