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Tariff regulation and profitability of energy networks

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Author Info

  • Machiel Mulder

    (Netherlands Competition Authority)

Abstract

In 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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File URL: http://www.nma.nl/images/Tariff_regulation_and_profitability_of_energy_networks22-157547.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by Netherlands Competition Authority in its series NMa Working Papers with number 3.

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Length: 42 pages
Date of creation: Dec 2010
Date of revision:
Handle: RePEc:nco:wpaper:1012

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