CEER publishes “Report on Regulatory Frameworks for European Energy Networks 2023”

Today, CEER publishes its annual Report on Regulatory Frameworks for European Energy Networks, covering 2023. This report analyses the regulatory systems of electricity and gas networks across EU Member States, Great Britain, Northern Ireland, Iceland, and Norway, as well as information on several Energy Community Regulatory Board (ECRB) countries (most of which are CEER Observers), including Ukraine.

Robust regulatory frameworks are essential for the development of energy markets, fostering confidence in market mechanisms and ensuring a level-playing field with sound investment signals. The report provides a general overview of the regulatory practices in place, rate of return calculations, the determination of the regulatory asset base (RAB) and asset depreciation in various regulatory systems.

Main conclusions include:

• Regulatory system characteristics differ significantly between countries, but many parallels can be identified between their regulatory regimes.
• The weighted average cost of capital (WACC) is the preferred method of asset valuation by many NRAs.
• While fixed assets are most often included in the RAB, more than half of NRAs do not include working capital in the RAB, or use a derived notion, depending on the system operator.
• Straight-line depreciation is applied by most NRAs in gas and electricity regulation with varying depreciation values.
• The developments of energy networks in Europe should be regularly analysed due to changes driven by the energy transition.
• Governments, NRAs and companies are dealing with an ongoing conflict in Europe since 2022, which exacerbates challenges to manage the energy crisis.

Accompanying the report are: a summary document, a collection of extensive tables, in-depth case studies of 11 countries, and a general case study illustrating a hypothetical situation.