Electricity LRAICkick-off meeting
20th February 2013
www.pwc.com/sk
Agenda
Conceptual approach
TSO network conceptual design
TSO network conceptual design
Project approach
PwC
PwC project team
Project plan
Open issues
Immediate next step
2February 2013LRAIC
Cost base
Historic cost based
• Assesses past behaviour
Forward looking
• Basis for future decisions
• Relevant cost for a new entrant
Uses
PwC
• Relatively simple
• Easy to produce
• Embeds economically inefficientallocation of resources
• Misstates real profit
• Supports economically efficientdecisions
• Establishes target costs
• Complex modelling
• Outputs sensitive to chosenmethodology
LRAIC3
január 2013
Positives
Negatives
Modelling approach
Top Down
• takes as a starting point the accounts ofan operator
• captures the actual costs of doing
Bottom up
• ‘builds’ a hypothetical network
• engineering model designed to meet agiven level of demand at a prescribed
PwC
• captures the actual costs of doingbusiness
• embeds current inefficiencies in themodel
• requires detailed understanding ofcurrent structure of accountingevidence
given level of demand at a prescribedgrade of service
• constructs an efficient network
LRAIC4
január 2013
Long Run Average Incremental Costing concept
Fully distributed costs (FDC)
• full allocation of costs that are directlyor indirectly attributable to the product
Long-run averageincremental costs (LRAIC)
• considers the incremental costsassociated with the increase of theoutput of the product by a discrete
PwC
or indirectly attributable to the productor service
• allocates direct variable costs, directfixed costs, share of joint costs andshare of common costs to the service orproduct
output of the product by a discreteincrement
• when the increase is represented by asubstantial, then both direct variablecosts and direct fixed costs will changewith the increase of the output of theproduct or service
LRAIC5
január 2013
Conceptual approach
• Modeling andcosting
Technical-technological model
• TSO model• DSO model
PwC 6január 2013LRAIC
costingapproaches
• WACC• Depreciation
Methodologicalguidelines
• TSO model• DSO model
• DSO model• Interim and
Finalcalculation
LRAIC economicalmodel
TSO network
PwC 7január 2013LRAIC
Source: http://www.geni.org/globalenergy/library/national_energy_grid/lithuania/lithuaniannationalelectricitygrid.shtml
TSO network conceptual network design
330kV
Losses
International connections
Producers
Losses
Customers
PwC 8január 2013LRAIC
110kV
HV/HVtransformation
Losses
Own consumption
Losses
Customers
Producers
DSO network conceptual network design
HV330kV/110kV
35kV, 20kV, 16kV,10kV, 6kV
HV/MVtransformation
Losses
Own consumption
delivery points
Producers
PwC 9január 2013LRAIC
LV
MV
MV/LV transformation
0.4kV
Losses
Customers
Losses
Own consumption
Losses
Customers
smallproducers
Project approach
Best practice and well-provenmethodologies in designing costingmodels and methodologies
Technical knowledge of electricitytransmission and distribution networks
Detailed knowledge of the localelectricity transmission anddistribution market
Relationship with the local market
Joint effort to fulfillproject’s goals and
timeline
PwC 10január 2013LRAIC
transmission and distribution networksin
Experts from the area of energy sectorregulation
Extensive project managementexperience from similar projects
Knowledge of both the local market andEU energy market
Relationship with the local marketparticipants
Relevant comments on themethodologies, cost models and finalcost estimation
Transfer of knowledgeto NCC’s personnel
Strong projectmanagement and
project governance
PwC project team
Project leadership:
Audrius Cesiulis/Ivo Dolezal
ElectricityLRAIC experts:
PwC 11január 2013LRAIC
Electricityengineers:
Jaroslav Sabata,Rudolf Milota
LRAIC experts:Ondrej Seban,
Martina Habanova
Project team:Rapolas Striukas and otherLithuanian consultants as required
High level project plan
PwC 12január 2013LRAIC
High level project plan
PwC 13január 2013LRAIC
Thank you for your attention!
Cieľom tejto publikácie je priniesť čitateľovi iba všeobecné informácie a pomôcť mu získať základný obraz o veciach, o ktoré sa zaujíma, a nie poskytnúť mu profesionálne poradenstvo. Nikto by sa preto nemal riadiť výlučne informáciami, ktoré sú v nej obsiahnuté, ale mal by sa zakaždým opierať o špecifické odborné rady. Nevydávame nijaké prehlásenie resp. záruku (či už explicitnú alebo implicitnú), pokiaľ ide o presnosť či úplnosť informácií uvedených v tejto publikácii, a v rozsahu, v akom to zákon povoľuje, firma PricewaterhouseCoopers Slovensko, s.r.o. a ani jej spoločníci, zamestnanci a zástupcovia neprijímajú ani nepreberajú na seba nijakú povinnosť, zodpovednosť či povinnú starostlivosť za akékoľvek následky voči komukoľvek, kto by konal alebo nekonal podľa informácií uvedených v tejto publikácii ani za akékoľvek rozhodnutia prijaté na jej základe.
© 2011 PricewaterhouseCoopers Slovensko. Všetky práva vyhradené. Názov "PwC” v tomtodokumente označuje spoločnosť PricewaterhouseCoopers Slovensko, s.r.o., ktorá je členom siete firiem PricewaterhouseCoopers International Limited, z ktorých každá je samostatným anezávislým právnym subjektom.