ACER publishes its latest report on how electricity network tariffs are set in Europe

The EU Agency for the Cooperation of Energy Regulators (ACER) has published the 3rd edition of its biannual Report on Electricity Transmission and Distribution Tariff Methodologies in Europe.
It includes:
+ Reviews the tariff methodologies across EU Member States and Norway;
+ A Focus on selected topics (i.e. cost models, cost cascading, injection charges, connection charges, reactive energy charges and time-of-use network tariffs ); and
+ Recommendations to regulators on how to improve national tariff setting.
The ACER report must be taken into account by national regulatory authorities (NRAs) before they can set or approve transmission or distribution tariffs, or their methodologies.
The Report makes the following suggestions to the NRAs:
+ To evaluate the pros and cons of applying incremental or forward-looking cost models;
+ To collect network costs, classified by different voltage levels;
+ To differentiate a proposed list of cost categories and identify for each of them the most appropriate cost drivers for allocation to the tariff structure;
+ To set an appropriate tariff basis for injection charges;
+ To consider connection cost-sharing between current and future network users;
+ To monitor the evolution of costs due to voltage control and reactive energy management, and to review reactive energy charging where costs deem significant; and
+ To investigate the need for time-of-use signals, evaluate their impacts and avoid optionality where they are introduced to reflect system costs.
The report also restates earlier ACER advice (e.g. on frequency of setting tariff methodologies and updating tariff values, stakeholder involvement, transparency and structure of tariffs).