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Tuesday 19.03.2019 | Name days: Jāzeps
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Regulator invited to assess calculation of electricity transmission tariff

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUConclusions made by State Audit in relation to tariffs employed by Sadales tīkls show that recommendations received from OECD a couple of years ago in relation to public service tariff calculation should be carefully considered and adopted to ensure balance the interests of consumers and service providers.

In its report, State Audit concluded that tariffs employed by Sadales tīkls were calculated in accordance with the method developed by the Public Utilities Commission. However, after a closer look at costs included in the transmission system’s tariffs, experts concluded that they are not economically justified. Effective and production in all cases, which means Sadales tīkls should improve its internal processes.

State Audit especially turns the regulator’s attention towards the proportionality of commitments undertaken by Sadales tīkls and economic benefits of the special machinery lease contract.

‘The goal of the audit was not performing an analysis of the regulator’s approved tariff calculation method, because it had been performed by OECD in 2016. The report of this analysis stated that the method used for the tariff’s calculation does not contribute to the operator’s efficiency and productivity. OECD had also provided recommendations on ways to improve the calculation method to motivate state businesses to use their resources more efficiently,’ SA explains.

OECD recommended the regulator to use the method that would motivate Sadales tīkls to voluntarily reduce tariffs, which would benefit both users and service providers.

State Audit hopes findings of this audit will be useful for the regulator and will motivate them to consider changing tariff calculation for electricity transmission services.

The regulator, on the other hand, notes that State Audit focused on only some part of costs associated with transmission services in its evaluation.

‘The audit did not even touch the Public Utilities Commission’s tariff approval process, nor the tariff decision, whereas conclusions regarding tariff size and economic justifications have been made,’ the regulator explains.

The regulator also mentions that not all costs the State Audit doubted in its report are part of tariffs and have any effect on tariff size.

In its report, State Audit analysed the actual costs of 2017 that were not included in tariffs, because the regulator had approved tariffs in May 2016, says Public Utilities Commission.


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