Setting the allowed revenue for the Irish price control review 2012-17

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Client Commission for Energy Regulation (CER), Ireland
Dates 2012
Service(s)Policy & Economics, Regulation & Competition

CEPA (leading a consortium of GL Noble Denton and PKF (UK) LLP) advised the Commission for Energy Regulation (CER) in Ireland on the setting of allowed revenues for the gas transmission and distribution activities of the network operator Board Gáis Networks (BGN) between 1 October 2012 and 30 September 2017. This was the CER’s third regulatory review of BGN’s allowed revenues (PC3) and the second undertaken by CEPA.

The advice provided on the project included:

  • evaluating the theoretical and technical assumptions underpinning the current revenue controls including providing a training session on price control process and broader regulatory economics;
  • reviewing the capital and operational expenditure of BGN during the current control period against allowed revenues;
  • review and assessment of the expenditure incurred by BGN to establish the company as an independent transmission operator (ITO);
  • advising on the procurement processes used by BGN for outsourcing work with a view to ensuring that processes result in competitive, market-based prices;
  • advising on the efficient level of capital and operational expenditure required by the ITO business from 2012-2017;
  • benchmarking BGN service provision, operating and capital investment activities against comparable organisations;
  • reviewing the incentives that were placed on BGN over the period 2007-2012 and providing recommendations on incentive mechanisms for the forthcoming price control; and
  • advising on maximum allowed revenues throughout the review period including treatment of uncertain costs over the control period.

The deliverables for this project included three reports that were published alongside the CER consultation papers on both distribution and transmission. These CEPA reports were on BGN Transmission allowed revenue for PC3, BGN Distribution allowed revenue for PC3, and a report on outputs and incentives. These reports can be found here.