DTe Introduces Quality Regulation of Electricity Grids

The Office of Energy Regulation (DTe) intends to reward or penalise the managers of regional electricity grids financially for the quality of their grids. In addition to present regulation, which ensures that the tariffs which consumers pay for electricity transmission are not too high, DTe also wishes to ensure that consumers receive good quality. "In recent years the electricity transmission tariffs have been reduced by EUR 1.4 billion. This provides an incentive to work more efficiently, but can also result in irresponsible economies," according to Gert Zijl, the Director of DTe. "With our new system, we ensure that consumers will continue to enjoy an optimal price/quality ratio."

DTe will introduce quality regulation retrospectively from 1 January 2004. The system is symmetrical. Grid managers who have more outages from this date onwards than the norm determined by DTe must charge their customers lower tariffs. If grid managers exceed the norm, they may increase their tariffs. The extent of the tariff adjustment is based on the loss suffered by consumers due to outages. This enables grid managers to finance additional investment, provided this results in an improvement in quality. The quality regulation of electricity grids is the result of extensive consultation of grid managers and organisations representing customers.

DTe is the first energy regulator in Europe to introduce this form of economic regulation.