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Georgian National Energy and Water Regulatory Commission GNERC

Georgian National Energy and Water Regulatory Commission GNERC. Bucharest Workshop 18-20 May, 2008. Valuation of Assets Basic Principle – Original Cost Less Accumulated Depreciation.

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Georgian National Energy and Water Regulatory Commission GNERC

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  1. Georgian National Energy and Water Regulatory CommissionGNERC Bucharest Workshop 18-20 May, 2008

  2. 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

  3. 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

  4. 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.

  5. 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

  6. 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

  7. Thank You

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