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Electricity Distribution: tariff framework

2007 was the last year of the second regulatory period regulating the tariff system for electricity distribution, which involved, through the publication of AEEG resolutions 156/07 and 157/07 starting form the second half of 2007, the completion of the deregulation process which had begun in 2000.

The final stage of the deregulation process regarded the domestic customer segment whose distribution tariffs were revised by AEEG by resolution 135/07 in order to permit the complete separation of the roles.

The revision of the tariff system further defined and separated the roles of the distributor and seller providing for the transfer of all the tariff components associated with sales activities to the sales company who will become the reference for the customers as regards everything pertaining to the supply relationship.

As a result of that, and unlike the first three years of this second regulatory period, there were numerous and substantial changes made during 2007, and more specifically:

  • Resolution 275/06 that provided for a change in the metering revenue amounts and allocated a portion of these amounts to the repayment of the investments in low voltage electronic counters installed up to 31 December 2005
  • Resolution 135/07 that provided for the removal of the sales component from the distribution tariff for domestic clients, which component was transferred to the sales tariff by resolution 156/07 (PCV component) and only applied to the customers in the most protected market;
  • The confirmation of the general standardisation of revenues, obtained by the application of the D2 and D3 tariffs to domestic customers, using, the theoretical D1 tariff as reference;
  • The confirmation of the scheduled productivity recovery level (X-factor) equal to 3.5% pa. for distribution and 2.5% p.a. for transmission

Against this tariff backdrop the revenues from electricity distribution in 2007 were equal to about Euro 50.5 million with distributed volumes equal to about 2,248 Gwh with an average revenue per unit of Euro cents 2.25 per kwh.

Hera consolidated Electricity distribution revenue20062007var %
Revenues (milions of euro)43.550.516%
Volumes (Gwh)1,8802,24820%
Average revenue per unit (Eurocents per kwh)2.322.25-3%

In order to compare this with 2006 it should be noted that although the bases were alike at 31/12 and so the former Enel networks were included in both years, they were only actually acquired at the start of the second half-year period in 2006 and were therefore only present for half the year. The change in the reduction of the average revenue per unit was due to the combined effect of resolutions 275/06 and 135/07 which partially reduced the positive effects of 203/06 regarding the adjustment of the tariff parameters applicable to 2007 distribution tariff options, and the effects of higher volumes and differing distribution mixes.