To use energy networks, customers must pay some form of tariff, often known as an access charge. These charges are typically designed to allow the energy network to recover the costs of providing the service, but also need to be structured appropriately to provide the right incentives to users of those networks. FTI Consulting and its subsidiary, Compass Lexecon Energy professionals offer extensive experience assisting energy network companies to develop charging approaches in a variety of circumstances.
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Network Charging Approaches
There are many different approaches for charging for connections to, and for using, electricity or gas networks, including capacity, commodity, fixed and variable charges and, increasingly, different tariffs at different times of day and year. The tariffs levied on users need to enable network companies to recover their allowed revenues, so a critical component of tariff design is an assessment of different customer rates of usage or extent of usage of the network, as is the cost of providing different types of services to different types of customers (including in different locations).
Tariff Calculation Models
In addition to usage assessments, FTI Consulting and its subsidiary, Compass Lexecon Energy professionals also develop quantitative models to calculate tariff levels which a company should be allowed to recover and how. Such models are designed to reflect regulatory requirements and to ensure that tariffs are recovered fairly across the network’s customer base. In addition, we use tariff calculation models to help users of energy networks determine if tariffs are fair or if they need to be negotiated with either the network provider or the regulators.