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Tariff regulation and profitability of energy networks


  • Machiel Mulder

    (Netherlands Competition Authority)


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.

Suggested Citation

  • Machiel Mulder, 2010. "Tariff regulation and profitability of energy networks," NMa Working Papers 3, Netherlands Competition Authority.
  • Handle: RePEc:nco:wpaper:1012

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    References listed on IDEAS

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    More about this item

    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

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