RAE, the Regulatory Authority for Energy, has begun work on a long-term regulatory framework for distribution network operator DEDDIE/HEDNO following a request by power utility PPC, the operator’s parent company. The distribution operator’s regulatory framework is currently revised annually.
PPC wants a stable, long-term regulatory framework for its subsidiary ahead of its planned privatization as potential buyers will be offered a clearer picture on the operator’s earnings prospects.
The framework, being prepared by RAE in conjunction with the distribution network operator, will take into account various factors and determine the latter’s earnings.
It is believed the new regulatory framework will have a four-year duration, but this detail remains unconfirmed.
PPC’s administration has requested a five-year plan along with terms enabling an extension for a further five years.
The new framework is expected to be completed by June ahead of its implementation at the beginning of 2021. Various trial runs are planned until then.
The distribution operator’s new regulatory framework is expected to include incentives encouraging the achievement of goals such as a reduction of distribution system leakages, network improvements and higher WACC levels.