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Incentive Regulation Amendment – EXXETA Energy Blog

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Incentive Regulation Amendment

On 1 June 2016, the German Federal Cabinet has adopted an amendment of the Incentive Regulation. The amendment should guarantee a more efficient and secure energy infrastructure. But therefore, the system operators are challenging high requirements for transparency and publishing of data.

The main framework condition of an efficient and secure infrastructure for the supply with electricity and gas is the Incentive Regulation in Germany. Since 2007, the Incentive Regulation determines how much money the regulated system operators can collect from the public for the maintenance and development of their networks. But with regard to the increase of the renewable energies and the assurance of sustainable energy supply, system operators are challenging high investments in the electricity and gas supply systems.

To face the required investments, an amendment of the Incentive Regulation was necessary. On 1 June 2016, the German Federal Cabinet has adopted an amendment of the Incentive Regulation. It provides a stricter regulatory framework and extensive transparency and publishing requirements of the system operators by the regulators. Here, there is an extract from the regulation:

 

Modified Investment Conditions

  • Adjustment of the revenue caps and expansion factor
  • Eliminate time delay by annual capital cost comparison
  • Introduction of more objective criteria for distribution network
  • Introduction for an indicator system monitoring of investment behavior

 

New Efficiency Gains

  • Maintaining best-of-four approach for efficiency benchmarking, applying constant returns to scale in the data envelopment analysis (DEA)
  • Introduction of efficiency bonus for efficient network operators based on the DEA super efficiency levels
  • Introduction of new comparison parameters for more transparency

 

Altered Simplified Procedure

  • Lower the threshold of non-controllable costs
  • Reintroduction of periodic cross netting (considering seasonal lower and higher revenues)
  • Consideration of cross border cost allocation (responsibility of ACER = Agency for Cooperation of Energy Regulators)

 

Increased Transparency

  • Transparent presentation of the methods and results
  • Publication of supply disruptions
  • Introduction of monitoring system of supply disruptions less than three minutes

 

We give you advice on the implementation of the new Incentive Regulation in your company. We are going to offer new services to support transmission – and likewise distribution system operators in the gas- as well as in the electricity market.

If you have any queries or are interested in using our consulting services, please feel free to contact us via e-mail. We would be happy to provide advice.

 

Sources
BMWI (2015): Moderner Regulierungsrahmen für moderne Verteilernetze. URL (access on 13.06.2016):
http://www.bmwi.de/DE/Presse/pressemitteilungen,did=696206.html
BMWI (2016): Zweite Verordnung zur Änderung der Anreizregulierungsverordnung. URL (access on 13.06.2016):
http://www.bundesrat.de/bv.html?id=0296-16
BNetzA (2015): Anreizregulierung von Strom – Gasnetzbetreibern. URL (access on 13.06.2016):
http://www.bundesnetzagentur.de/DE/Sachgebiete/ElektrizitaetundGas/Unternehmen_Institutionen/Netzentgelte/Anreizregulierung/anreizregulierung-node.html

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