The Utilities Regulatory Fee (PSRC) has authorized a new technique on how potential regulated traders will calculate money fees and hold data of regulated belongings (fastened assets and intangible investments). In the foreseeable future, there will be a unified methodology for accounting for funds charges, which will use to procedure operators in the electrical power and purely natural gas sectors, water administration support companies and the common postal service service provider.
The new methodology will apply to the electricity transmission operator (AS “Augstsprieguma tīkls”) and distribution operators (AS “Sadales tīkls” and other operators of regulated distribution systems), the transmission and storage operator of the all-natural gas (AS “Conexus Baltic Grid”) and distribution operator (AS “Gaso”), common postal provider vendors (VAS “Latvijas Pasts”) and drinking water administration support vendors.
The new order was developed taking into account the affect of geopolitical circumstances and other variables on the macroeconomic problem, which include superior inflation. Namely, as the overall economy recovers from the effects of the limits prompted by Covid-19 and the commence of hostilities in Ukraine, the growth of the financial system has improved drastically both equally on a international scale and in Latvia. Just one of the reasons for the want for improvements can be specifically defined by the atypical macroeconomic disorders, when a immediate boost in buyer prices is observed.
“During the community consultation, in which we invited opinions on the new technique developed, a well balanced option was uncovered in accordance with the passions of shoppers and services suppliers. The transition to a unified expense of cash accounting methodology will guarantee equal opportunities for all regulated traders to compete for money attraction dependent on the possibility profile of their professional activities, as well as providing the chance to respond correctly to macroeconomic conditions in the foreseeable future, “explains PUK president Alda Ozola, noting that the new methodology arrived into effect this year. on September 1, but therefore the new prices of return on fairness for 2023 will be set by PUK by this yr. for September 30th. They will be applied in the calculation of tariff assignments, which are expected to come into influence in 2023.
At the similar time, A. Ozola also states that no tariff hike is envisioned due to the new buy in 2023.
The methodology for the accounting and calculation of cash expenses involves many modifications with regards to controlled functions, as effectively as the accounting of depreciation and the calculation of the return on cash.
Accounting of controlled assets
Regulated property are fastened property and intangible investments that a trader employs to give a controlled provider. The methodology presents for the dedication of a unified technique to the inclusion of property in the accounting of the controlled foundation (RAB). For illustration, the methodology obviously defines which activities have to be bundled in the accounting, which not, as well as which deviations are allowed in accordance to the prerequisites of the European Restrictions.
The methodology envisages not having into account, for the needs of calculating tariffs, the revaluation values of regulated belongings, which some operators have employed up to now. In this case, to evaluate the price of the controlled property, the trader will use the worth of the belongings as of December 31, 2021.
In addition, the new legislation will allow for the standardization of different ways to the inclusion of investments in the RAB benefit. In locations in which earnings (expenditure) changes are taken into account in identifying the allowable income, there is also an “ex submit” method to completely get better money expenditures for financial commitment tasks executed during the regulatory time period.
Calculation of the return on money
The prior laws provides for the application of the price of return on cash (WACC) in actual phrases (in the electrical power, organic fuel and common postal assistance sectors) and in nominal conditions (in the water management and thermal electricity). The new methodology supplies that, beginning from 2025, the WACC will be used only in nominal conditions in the calculation of the return on money. This alter in tactic will be certain that retailers receive and buyers bear a price of money corresponding to the real investment produced.
Accounting for depreciation
PUK has recognized many methods in deciding the beneficial everyday living of property. That is to say, it has been noticed that the life of the very same or related great are decided as different, or the traders decide a shorter everyday living, even if the good is able of performing and can be utilised in the provision of solutions. To tackle this, PUK collected information on the merchants’ fixed asset accounting and labeled the assets into the exact or very similar asset groups with least useful lives. From now on, traders will have to apply a uniform depreciation calculation process – linear.
Public session on the methodology for accounting and calculating cash costs took put this calendar year from 14 to 18 July, for the duration of which PUK received proposals and comments from 9 sector participants. On the other hand, seminars ended up held on 20 and 26 July to introduce businessmen from all sectors to the newly formulated process and two coordination meetings were being held on 5 and 23 August. You can familiarize your self with the selection of views PUC site.
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