Code of the output-based regulation of the electricity transmission service for the regulatory period 2016-2023

December 23, 2015

Italian version

With resolution 653/2015/R/eel, the Regulatory Authority for Electricity Gas and Water approves the provisions pertaining to the output-based regulation of the electricity transmission service for the regulatory period 2016-2023 (Annex A of the measure), which come into effect on 1 January 2016.
The Code - the outcome of a structured process of consultation, with the publication of four separate documents (5/2015/R/eel; 48/2015/R/eel; 415/2015/R/eel and 544/2015/R/eel) and numerous thematic meetings - has the following purposes:

• to ensure, in line with the introduction of cost recognition methods based on the total expenditure, that the service quality regulation integrate gradually in the same expenditure assessment processes and constitute a key component in the definition of outputs;
• to limit the yearly number of interruptions and voltage dips experienced by HHV-HV end users, providing an automatic compensation in case the guaranteed standards are exceeded;
• to promote initiatives to improve electrical system resilience following severe and persistent weather events.

The main innovations regard the following:

• awards/penalties regulation of Energy Not Supplied Reference (ENSR), which is confirmed, but net of the share concerning HV end customers, and applied to the entire transmission grid and no longer separately to the old RTN and RTN Telat;
• individual regulation for HV end customers: new standards are introduced on the maximum number of long and short interruptions and the maximum duration of interruptions, and automatic compensations in case of failure to meet those standards; HV end customers who will buy and install an appropriate equipment will be monitored for two years for transient interruptions and voltage dips, with the prospect of also introducing standards and automatic compensations for these types of events;
• requirements for the transmission company to publish the maximum and minimum values of Root Mean Square voltage expected and actual voltage for each HV user (HV/MV substations, end customers, producers);
• other output-based incentive regulation mechanisms for selective promotion of investments, on which the Regulatory Authority will provide further guidance in the course of 2016.

The text of the Annex also considers aspects pertaining to services rendered by distribution companies, Terna's joint participation in the regulation of the quality of electricity distribution services, the individual regulation for HV users, the unavailability of the RTN (national transmission grid) elements and the resilience of the electric system.
The regulation of the quality of the transmission service, in line with the cost recognition methods based on the total expenditure (totex), will be integrated with the same expenditure assessment processes and constitute a key component in the definition of outputs that the transmission company will undertake to provide as part of the regulatory contract.

Finally, the measure establishes the following:

• by 31 May 2016, Terna should update the Grid Code and submit it to the Regulatory Authority for approval, incorporating the instructions of the new regulation defined with the resolution 653/2015/R/eel;
• the service quality Working Table, established with the resolution 646/2015/R/eel, should conduct further studies also on themes concerning the resilience of the transmission grid (mechanical and electrical prevention of outages caused by serious events) and mechanisms to favour quick service recovery.

This sheet is for disclosure purposes only; it is not a measure.