Role and assessment of CAPEX in energy regulation training course

This training course explores the role and assessment of capital expenditure in energy regulation.

Capital expenditures in the energy infrastructure business is essential to ensure security of supply. Regulators and regulated companies apply investment appraisal techniques to assess investments to support their decision-making. The inclusion of capital costs in the allowed revenues recognizes the owner’s investment in the regulated company. Due to the capital-intensive nature of the energy infrastructure business, failure to allow a provision for adequate capital cost can pose a risk to discourage investment and may lead to reductions in quality levels and security of supply. On the other hand, including inefficient investment costs in the allowed revenue leads to high energy prices, distorted price signals and constrains the effective performance of the market. 

Course Content

This training course explains the regulatory approaches to include investments as part of the regulatory price control. Furthermore, appraisal techniques widely applied to assess the efficiency of investments to support decision-making will be a key part of this training course. It draws a special attention to the application of cost benefit analysis. Finally, it addresses the issues related to asset stranding from a regulatory point of view and it will guide participants step-by-step through the content:

• Integration of captital expenditures in the price control
• Methods for assessment of capital expenditure
• Cost Benefit Analysis - role and application
• Mathematical Techniques for Investment Decisions
• Assets utilization, stranded assets and regulatory policy.

For each module, the conceptual concepts are firstly provided, followed by appropriate examples and practical exercises that guide the participants to understand the practical use of the methods for investment analysis and to support regulatory decision-making.

Your Benefits

Upon completion of the course, participants will:

• understand the role and assessment of capital expenditure in energy regulation and the different techniques and methods that can be applied to support the assessment and decision-making process
• become familiar with the investment appraisal techniques widely applied in the regulatory treatment of capital expenditure and the role of cost benefit analysis in this context
• gain an understanding of drivers of low demand leading to declining asset utilization and possible asset stranding and potential regulatory policy to deal with asset stranding. 

The conceptual part of the training will be supported by comprehensive practical exercises throughout the course.

For Whom?

This training program is intended for everyone involved in regulated industry e.g. employees of regulated companies, investors, representatives of industry associations, staff of regulatory authorities, officials from policy making institutions.

Our Solution

This training is conducted by experienced and industry- wide well-known consultants of DNV with experience of conducting projects worldwide.

The objectives of the training program are to strengthen the existing and obtain new knowledge via the planned activities. The program applies adult style learning using interactive approach with group discussions and Q&A sessions. The training can customized to meet your company and/or your employees’ needs.

Speakers:
Konstantin Petrov, Daniel Grote, Waisum Steinborn-Cheng, Rosária Nunes and Daniel Anton

Dr. Konstantin Petrov is an energy economist and electrical engineer with a major focus in the area of economic regulation, market/industry design and applied. He has more than 30 years of work experience advising governments, regulators, industry participants and financial investors in the electricity and gas sector on multiple assignments (about 200 projects) in more than 50 countries worldwide. Konstantin has provided regulatory and policy making advice to the European Commission, European Associations of Transmission Network Operators, ACER (Agency for the Cooperation of Energy Regulators), CEER (Council of European Energy Regulators), ECS (Energy Community Secretariat), NARUC (National Association of Regulatory Utility Commissioners) and ERRA (Energy Regulators Regional Association). He managed and worked on numerous projects funded by the World Bank, IFC (International Finance Corporation), EBRD (European Bank for Reconstruction and Development), ADB (Asian Development Bank), USAID (United State Agency for International Development), GIZ (Gesellschaft für Internationale Zusammenarbeit) and CDB (Caribbean Development Bank). On several occasions he acted as an expert witness and assisted national courts and international arbitration tribunal in litigation cases. Dr Petrov is also a member of the International Association for Energy Economics (IAEE) and has been chairing and working in several groups at CIGRE (Council on Large Electric Systems). He has been teaching regulatory economics at the training courses of ERRA and Florence School of Regulation.

Dr. Daniel Grote is managing the energy markets and strategy team of DNV in Germany. He is an experienced regulatory economist and energy market expert supporting energy sector stakeholders across the energy value chain in the areas of policy and regulation, energy market design, investment appraisals as well as regulatory and economic assessments of energy infrastructure assets and business models. A particular focus of his work relates to economic and regulatory questions related to renewables (gas and electricity) and the energy transition. With 20 years of work experience in the energy sector, he has conducted more than 50 consulting projects, supporting energy sector stakeholders across the energy value chain in more than 20 countries. He has been working for a large number of regulatory authorities, governments and international organisations on the development, adjustment and application of the legal and regulatory framework for the energy sector and the design and assessment of (network) tariff structures. He has also been supporting several network operators, energy sector companies, industry associations and investors on the economic, financial and regulatory assessment of electricity and gas infrastructure assets, as well as on the compliance, understanding and consultation on the respective regulatory frameworks. He has also provided several training workshops on the foundations and specific questions of energy sector regulation. Through his work for several regulatory authorities and network operators, he has an excellent understanding of the requirements and views of both sides of the regulatory process and a deep knowledge of the legal and regulatory framework of the electricity and gas sector in a large number of countries. 

Waisum Steinborn-Cheng is a Senior Consultant in the Energy Markets and Strategy Team of DNV Energy Systems Germany.  She has 23 years of extensive experience in the energy sector and has assisted energy regulators and utilities worldwide.  Her focus areas are in the field of gas and electricity regulation, benchmarking gas and electricity networks, designing incentive regulation schemes - price controls, and financial modelling for gas and electricity networks. Strategic projects include transaction support including regulatory due diligence advice. Some examples of her project experience comprise of electricity and gas tariff methodologies including the conceptual design and development of network tariff setting tools. She has also worked on projects related to capex assessments, regulatory compliance frameworks, customer protection issues and social tariffs. Part of her professional experience comprise of providing training workshops on energy regulation related topics to a wide range of audiences. 

Rosária Nunes is currently working as a Senior Consultant at DNV Energy Systems, within the Energy Markets and Strategy department. Her work is centered on institutional and regulatory design, energy policy advisory, tariff setting, and transaction support, including regulatory due diligence and investment appraisal services. With over 18 years of professional experience in the regulated energy sector, covering both electricity and natural gas industries, she has developed deep expertise in energy markets and economic regulation. Her core competencies include the design and evaluation of regulatory regimes, incentive mechanisms, and pricing structures, as well as conducting price reviews, efficiency assessments, cost of capital analysis, and regulatory asset base (RAB) valuation. In addition, she has played a key role in capacity building and training initiatives for regulatory authorities, utilities, and other energy sector stakeholders. She has designed and delivered training programs and workshops on topics such as tariff methodologies, regulatory frameworks, and economic analysis for infrastructure investment. Her ability to translate complex regulatory concepts into practical, actionable insights has made her a trusted advisor and trainer in both emerging and mature energy markets.

Daniel Anton is an experienced Senior Consultant in the Energy Markets and  Strategy Team of DNV.  He has provided extensive regulatory and market advise to a wide range of stakeholders along the energy value chain, working on more than 30 projects in more than 15 countries across Europe, Middle East and Asia. A particular focus of his work has been the development and analysis of regulatory frameworks and network tariff structures, the development of electricity and gas transmission and distribution network tariff tools, regulatory impact assessments and efficiency analysis. He has also been conducting a large number of market (entry) studies and market assessments for large energy companies and network operators, including demand projections for electricity (linked to an increased electrification of the transport and heat sectors) and hydrogen as well as cost estimations for renewable energies. In addition, he has been working on several regulatory and commercial due diligence projects in Germany and Europe related to electricity and gas networks, power plant assets and gas storages. He has been conducting several training courses for industry stakeholders as well as for the Energy Regulators Regional Association (ERRA).