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Regulation

Resolution ARG/gas 159/08 - “Consolidated act on the regulation of the quality and tariffs for natural gas metering and distribution services for the 2009-2012 regulatory period (TUDG): approval of part II, Tariff regulation for gas distribution and metering services for the 2009-2012 regulatory period (RTDG). Temporary measures for 2009”.

With this resolution, published on 17 November 2008 (and subsequent amendments), the Authority defined the tariff criteria for the distribution and metering services for the third regulatory period, from 1 January 2009 to 31 December 2012. In summary, the resolution provides for:

  • Recognition of the net capital invested for the site by the revalued historical cost method and of the net capital invested with respect to centralised operations (non-industrial buildings and other fixed assets) by the parametric method;
  • Recognition of the operating costs of distribution operations on a parametric basis and differentiated depending on company size and density of the customers connected to the network;
  • Recognition of the operating costs of metering and sales operations using equal parametric components for all companies;
  • Assessment, at standard cost, starting in 2011, of all investments on the basis of a price list defined by the Authority (Modern Equivalent Asset Value (MEAV) method, based on the concept of new replacement cost);
  • Calculation by the Authority of the reference tariffs for each company, corresponding to the costs recognised for remunerating net invested capital, amortisation and depreciation, and operating costs;
  • Subdivision of the national territory into six tariff areas and calculation by the Authority of the respective mandatory tariffs that distributors must apply to users of their own networks;
  • Introduction of an equalisation mechanism, managed by the Authority through the Electricity Equalisation Fund, to guarantee equivalence between the revenue obtained by each company by application of the mandatory tariff, which naturally does not reflect the specific costs of each company and the costs recognised for such company, using the reference tariff.

The return rate (WACC) of net capital invested (RAB) is set at a real rate of 7.6% before taxes for the distribution service and at 8% in real terms before taxes for the metering service.

For the new investments relating to the modernisation of the odorisation system in the REMI cabins and the replacement of the cast-iron pipes with hemp- and lead-sealed joints, commissioned following 31 December 2008, a greater return of 2% over the base rate (WACC) was recognised for a period of eight years.

The method for updating the price cap tariffs is applied to revenue relating to operating costs, which are indexed to inflation and reduced by a fixed annual productivity return coefficient set at 3.2% for operating costs relating to distribution and 3.6% for operating costs relating to metering.

The revenue components which are related to returns and amortisation and depreciation are determined on the basis of the annual update of net capital invested (RAB).

Resolution ARG/gas 195/11 – “Updating of mandatory tariffs for 2012 for the provision of natural gas distribution and metering services and tariff options for the distribution and metering of gas other than natural gas by channelled networks”.

With this resolution, published on 30 December 2011, the Authority approved the mandatory tariffs for the year 2012 suspending the calculation of the reference tariffs for 2012, in anticipation of the process for evaluating the amendments due to the tariff regulation in force implemented by Resolution ARG/gas 235/10.

Lastly, the resolution provides for a one-year postponement, starting in 2013, of the introduction of the MEAV method for assessing the standard costs of investments for tariff purposes, pending definition of the pertinent price list by the Authority.

Resolution 315/2012/R/gas – “Amendments to the tariff regulation for the provision of natural gas and other gas distribution and metering services, in compliance with Council of State ruling 2521/2012. Redetermination of the reference tariffs and tariff options for gases other than natural gas for 2009 and 2010” and Resolution 450/2012/R/gas – “Determination of the reference tariffs and redetermination of the tariff options for gases other than natural gas for 2011 and 2012, in compliance with Council of State ruling 2521/2012”.

With these resolutions, the Authority redetermined the reference tariffs for 2009, 2010, 2011 and 2012.

With regard to the years 2009, 2010 and 2011, the Authority observed, inter alia, Council of State ruling 2521/2012, which, in particular, stated the unlawfulness of applying the ‘gradual’ mechanism19 on the basis of a criterion applied at national level. As a result of these resolutions, in relation to the 2009-2011 period, incremental revenues equal to €143 million were recorded for Italgas, of which €128 million had been collected as at 31 December 2012.

Resolution 436/2012/R/gas – Extension to 31 December 2013 of the period of application of the provisions set out in the “Consolidated Act on the regulation of the quality and tariffs of gas distribution and metering services for the 2009-2012 regulatory period (TUDG)”. Transitional measures for 2013”.

With this resolution, published on 26 October 2012, the Authority extended the current tariff criteria for natural gas distribution services to the transitional period from 1 January - 31 December 2013, in particular updating the rate of return on invested capital for distribution services from 7.6% to 7.7% in pre-tax real terms and updating the components covering operating costs by applying the productivity recovery rates adopted for the determination of the 2012 tariffs, reduced by applying the staggered scale provided for by Resolution 315/2012/R/gas.

With this resolution, published on 6 November 2012, in order to implement Council of State ruling 2521/2012, the Authority determined the reference tariffs for 2011 and 2012.

Resolution 553/2012/R/gas of 24 December 2012 – “Updating of the tariffs for gas distribution and metering services for 2013”.

With this resolution, the Authority determined the reference tariffs and the mandatory tariffs for natural gas distribution and metering services for 2013, in compliance with the transitional provisions defined in Resolution 436/2012/R/gas.

19 Specifically, this mechanism provided for a gradual adjustment, over the four years of the third regulatory period, of net invested capital and the return thereon, and of the amortised tariff component, in the event of a change of more than 5% nationally between the net invested capital determined according to the new criteria for the third regulatory period and the net invested capital resulting from the update to the net invested capital recognised in the second regulatory period. Since the aggregate change in net invested capital nationally was greater than 5%, the ‘gradual’ mechanism was applied for all distributing companies. Following the aforementioned ruling, however, the change in net invested capital must now be determined for each individual distributing company, rather than nationally. Consequently, in the event of a change in net invested capital of less than 5%, the relevant tariff adjustments must be fully recognised in relation to the distributing company as of the first year of the regulatory period, rather than being extended over a period of four years.

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