georgian national energy and water regulatory commission gnerc
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Bucharest Workshop 18-20 May, 2008
Valuation of AssetsBasic Principle – Original Cost Less
Accumulated Depreciation
Privatisation of Distribution Networks and six HPPs (2007). Cost of assests was equal to that of under original cost less accumulated depreciation
Assets used in non-regulated activities are not considered in tariff calculations
Treatment of O&M CostsActivities Provided Outside the Utility
Only the costs that are necessary to carry out regulated activities are treated in tariffs
Costs should incurr at reasonable (acceptable) prices
Allocation of Costs Between Regulated and Non-regulated Activities
List of costs related to regulated activities is defined in the methodology of setting tariffs
According to The Law the Licensees are required to keep separate accounting of costs and revenues for regulated and non-regulated actitivies.
Disallowable Costs in Setting Tariffs
Only the costs necessary for carrying out regulated activities are subject to inclusion in tariff calculation
All other costs remain as disallowable
New Construction
Investors start to recovery the costs for new constructions only after the plant is put into service
Supply Cost
Different sources of supply bear different costs
High volatility is forcastable to some extent
Thank You
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