ENTSOG First Report on Implementation Monitoring and Baseline for Effect Monitoring of the Tariff Network Code

\\ The other about the evolution of the spread of regulatory account imbalance over time, compared to the average allowed revenue   16) . This sub-indicator, named Standard Deviation of Balance to the average allowed Revenue Ratio (SDBRR), is assessed between 2013–15 and 2014–16: it shows if the absolute values of the regulatory account balance compared to the allowed revenue change little or much over the period. E. g., if TSO A has an SDBRR of 6% in 2013–15 and 5% in 2014–16, this sub-indicator shows reduced variability of the imbalance compared to the average allowed revenue over the years. The more SDBRR tends to reduce over years, the better (because it implies lower revenue and tariff instability over time).

Where: \\

and

are the Average Balance-to-Revenue

Ratios for periods 2013 to 2015 and 2014 to 2016. \\ , , and are the regulatory account balances for regulatory years 2013 to 2016, under the assumption that the balance is simply the difference between the actual and the allowed revenue for each regulatory year. \\ , , and are the allowed revenues for regulatory years 2013 to 2016. \\ and are the values of the standard deviation of regulatory account balances, respectively for periods 2013 to 2015 and 2014 to 2016. \\ is the regulatory account balance for regulatory year ‘i’. \\ and are the arithmetic means of the regulatory account balances, respectively for periods 2013 to 2015 and 2014 to 2016.

 16) With the same example as in the previous footnote, the standard deviation of imbalances is +2 in the Year 1 to Year 3 period (−5 and −1 are indeed 2 units away for the average −3), and +3 in the Year 4 to Year 6 period (+1 and +7 are indeed 3 units away from the average +4). With the same assumptions in terms of allowed revenue as before, then the SDBRR is +2/100 = 2% for the first period, and +3/100 = 3% for the second period. Therefore, the dispersion of imbalances has increased, from 2% to 3%. This may be a sign of increased variability in the imbalances, since it is less easy to forecast what will be the imbalance in future years from information about past imbalances. Such instability may justify sharper year-on-year tariff changes.

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