The rate for the fifth regulatory period (2016-2023) is governed by ARERA Resolution no. 654/2015/R/eel. This period lasts eight years and is divided into two sub-periods of four years each (NPR1 for 2016-2019 and NPR2 for 2020-2023).
With regard to the NPR2 period, on December 27, 2019 ARE RA published Resolution no. 568/2019/R/eel, with which it updated rates for distribution and metering services in force in the 2020-2023 period, publishing the new integrated texts (TIT 2020-2023 and TIME 2020-2023), substantially confirming the pre-existing regulatory framework regarding the return on capital and depreciation and making only a few changes to the methods for recognizing operating costs.
With Resolution no. 639/2018/R/com, ARERA set the value of the WACC for distribution and metering activities, valid for the 2019-2021 period, at 5.9%, up 0.3 points compared with the 5.6% in force for 2016-2018.
As for distribution and metering rates, ARERA approved both the definitive reference rates for 2018, calculated by taking into account the actual balance sheet data for 2017 (Resolution no. 76/2019/R/eel), and the provisional reference rates for 2019 on the basis of the preliminary balance sheet data for 2018 (Resolution no. 117/2019/R/eel). The definitive reference rates for 2019 are expected to be published in the early months of 2020.
With regard to service quality, ARERA, with Resolution no. 646/2015/R/eel as amended, established output-based regulation for electricity distribution and metering services, including the principles for regulation for 2016-2023 (TIQE 2016-2023). With Resolution no. 566/2019/R/eel, ARERA completed the update of the TIQE for the 2020-2023 semi-period, proposing tools to bridge gaps in quality of service still existing between the various areas of the country, taking account of the time needed to implement interventions on the grid as well as the effects of climate change.
With Resolution no. 534/2019/R/eel, ARERA published the list of interventions in the 2019-2021 Resilience Plan of e-distribuzione eligible for the bonus-penalty mechanism envisaged under the provisions of Resolution no. 668/2019/R/eel, which introduced an incentive mechanism for investments to increase the resilience of distribution grids in terms of resistance to loads deriving from extreme weather events.
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With decision no. 2538/2019 published on November 28, 2019, the Lombardy Regional Administrative Court, ruling that the Ministry for Economic Development did not have jurisdiction, voided the part of Interministerial Decree of May 10, 2018 setting the cap on the rate subsidy pertaining to distribution companies at €250/EEC and, consequently, Resolutions no. 487/2018/R/efr and no. 209/2019/R/efr, with which ARERA had updated the rules for determining the rate subsidy. As a result, ARERA initiated a procedure for amending the rate subsidy to be paid to distributors with Resolution no. 529/2019/R/efr.
ARERA issued Resolution 50/2018/R/eel, which introduces a reimbursement mechanism for non-recoverable receivables of distribution companies in respect of the general system charges paid to the Energy and Environmental Services Fund (CSEA) and Energy Services Operator (GSE) but not collected by defaulting sellers whose transport contract has been terminated. The provision permits the recognition of receivables accrued as from January 2016. This resolution was also challenged by a number of operators and a consumer association, but all appeals were denied and the rulings are definitive.
Resolution no. 495/2019/r/eel also provided for the payment by March 2020 of default interest on the system charges requested from distribution companies with order of 2018, while, once fully operational, that will be replaced by legal interest automatically calculated by CSEA. With Resolution no. 655/2018/R/eel, ARERA intervened to supplement the CADE in order to allow the termination of a transport contract even in the event of failure to adjust guarantees following changes in turnover/number of customers. This resolution was also challenged by an operator and the judgment is currently pending before the Milan Regional Administrative Court. In response to traders failing to reinstate enforced guarantees, or failure to pay transport service fees, e-distribuzione sought to terminate certain transport contracts, with the consequent filing of new suits (additional to those previously filed as a precautionary measure to hinder the procedures for enforcing the sureties initiated by e-distribuzione following the non-payment of the fees invoiced to the traders, all of which were decided in favor of e-distribuzione ), with which the traders are contesting the termination of the contract and claiming damages. e-distribuzione is participating in the proceedings in order to contest the plaintiffs’ opposing and to request payment, in a counterclaim, where necessary, of its receivable in respect of the traders.
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In 2019, the first year of the fourth regulatory cycle, the national regulatory authority ANRE revised the assumptions underlying the calculation of regulated revenue up to the year 2023, adopting a structure closer to the Enel business model. The effects were favorable for distribution activities for the 2019 financial year as well. Furthermore, thanks to a government decision, the regulated rate of return was increased from 5.66% to 6.9% with the aim of increasing investment in grids.
Rate revision for Enel Distribuição Rio (2019)
The rate revision of Enel Distribuição Rio provisionally approved on March 13, 2018, in accordance with Resolution no. 2.377, was subsequently approved by the regulatory authority ANEEL on March 12, 2019, resulting in an average increase for customers of around 9.70%.
This increase applied from March 15, 2019 to March 31, 2019.
Extraordinary rate revision for Enel Distribuição Rio (2019)
On March 20, 2019, ANEEL authorized the Cámara de Comercialização de Energia Elétrica (CCEE) to finalize the agreement with eight banking groups to bring forward payment of the CDE-ACR (the so-called “rate deficit”) for September 2019.
This decision was reflected in the rates applied by Enel Distribuição Rio, which increased by 7.59%.
These rates apply to the period from April 1, 2019 to March 14, 2020.
Rate revision for Enel Distribuição Ceará
On April 18, 2019, ANEEL approved the fifth periodic revision of the rates of Enel Distribuição Ceará, which applied as from April 22, 2019. The average increase was 8.22%.
Rate revision for Enel Distribuição São Paulo (2019)
On July 2, 2019, ANEEL approved the fifth periodic revision of the rates of Enel Distribuição São Paulo, which applied as from April 22, 2019. The new rates produced an average increase of 7.03%.
The next rate review is expected in four years.
Rate revision by Enel Distribuição Goiás SA (2019)
On October 22, 2019, ANEEL approved a new rate revision for Enel Distribuição Goiás, which took effect from the same date. The new rates produced an average decrease of 3.90%.
Rate revision for Edesur (2019)
On February 1, 2019, Resolutions ENRE 24/2019 and 26/2019 were published in the Official Journal. The first approved the values of the rate table to be applied with effect from February bruary 1, 2019, based on consumer price inflation, established with Resolution SGE 366/2019. It also includes an increase in the FNEE, which went from $15.5/MWh to $80/MWh. The second resolution (26/2019) approved the new distribution rates, which took effect from the same date (February 1, 2019), establishing that the increases of February 2019 in the VAD (Aggregate Distribution Value) will be applicable from March 1, 2019. The changes reflect the variation of 23.57% in the MMC from August 23, 2018 to February 19, 2019, the X factor of -5.42% and the Q factor (investments) of 1.74%.