Tariff regulation and profitability of energy networks
AbstractIn this paper we analyse the impact of the regulatory framework for the new regulatory period (2011 – 2013) on the long-term profitability of TenneT TSO, the operator of the highvoltage electricity network in the Netherlands. Long-term profitability is a key component of the financeability of a firm. In the long run, the return on capital should be at least equal to the opportunity costs of capital in order to finance investments. As the ultimate indicator for the long-term profitability, we use the net present value of economic profit, which is the difference between total revenues and total costs, including a normal return on capital. In order to simulate the future financial development of the TSO, we developed a model.
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Bibliographic InfoPaper provided by Netherlands Competition Authority in its series NMa Working Papers with number 3.
Length: 42 pages
Date of creation: Dec 2010
Date of revision:
Find related papers by JEL classification:
- C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-12 (All new papers)
- NEP-CMP-2011-03-12 (Computational Economics)
- NEP-ENE-2011-03-12 (Energy Economics)
- NEP-REG-2011-03-12 (Regulation)
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