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Tariff design for distribution systems

Provide detailed information as input for a comparison of distribution tariffs structures across the EU.

Description of project:

Network tariffs are strictly competence of Member States (MS), implemented through the National Regulatory Authorities (NRAs), who are responsible for "fixing or approving, in accordance with transparent criteria, transmission and distribution tariffs or their methodologies". Transparency is a key issue in fixing or approving network tariffs. The EU legislation gives flexibility to MS to develop their own methodology on which tariffs should be set, requiring that regulatory authorities "shall ensure that transmission and distribution system operators are granted appropriate incentive, over both the short and long term, to increase efficiencies, foster market integration and security of supply and support the related research activities". Against this background, the distribution tariff structure varies across the EU reflecting the particularities, structure and organization of the national electricity and gas systems.

The aim of this consultancy is to provide detailed information as input for a comparison of distribution tariffs structures across the EU by analysing and benchmarking the distribution tariffs systems and their methodologies across the EU, with the aim to identify good practices among MS. In particular, the work should focus on how tariffs and their methodologies: a) incentivise cost effective development of Distribution System Operators (DSOs) tasks; and b) incentivize investments of DSOs and retail market actors in benefit of consumers, such as the roll-out of smart grids, demand response, energy efficiency and market integration of distributed generation and electric vehicles.

The outcome of this study serves as the basis for possible recommendations to the Member States in the context of the Smart Grid Task Force and of the upcoming Commission's Communication on the retail market to be adopted during 2014.

ÅF's services:

The analysis, that covers both electricity and gas sectors, encompassed the following points:

  • Formulate indicators to help the Commission assess and benchmark the cost-effectiveness of the DSOs and their operational efficiency in the performance of their tasks;
  • Help establish EU-wide principles to be taken into account for incentives for DSOs to further develop and smarten their grids and their methodologies to achieve this goal;
  • Provide expert analysis and assessment per Member State on how distribution network tariffs and their methodologies incentivize efficiencies of DSOs tasks and investments of DSOs and retail market actors in benefit of consumers;
  • Identify best practices on distribution tariffs structures that incentivize efficiencies and facilitate innovations in the retail market enhancing the active participation of consumers;
  • Analyze the tariff structure between the different consumer groups
  • Formulate recommendations to the commission on its findings.

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