engleski

Regulating Thermal Energy: Case of Croatia

Creation of a new tariff system is a big professional challenge. The Croatian energy regulatory agency (CERA) has made a methodology of the Tariff system for thermal energy activities and passed it (lacking the amounts for tariff elements) in May 2005. Revenue and prices are important in order to safely operate the national thermal sector and further has a big influence on security and quality of heat supply for quite a number of consumers. Background of the Tariff system for thermal energy activities (heat generation, heat distribution and heat supply), including a legislative framework relevant for implementing the tariff system, terminology, matrix of tariff models and tariff elements and amounts of tariff elements are analyzed in this paper. Special attention is paid to the economic characteristics of the Tariff system using the Capital Asset Pricing Model (CAPM), chosen among several models of the Weighted Average of Capital Costs (WACC). By using the WACC, the regulatory authorities can ensure that returns are equal to the opportunity cost of capital. Furthermore, CAPM is used to estimate the cost of equity funds. Additionally, main formulae and procedures for submitting the proposal for changing the amounts of tariff elements are analyzed.

regulation; thermal energy; CAPM; Croatia

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