The model is used to project the results of the revenue control process and enables us to analyse the consequences of structural, cost and regulatory changes. TIM is also licensed directly to network companies.
The model is developed and maintained by THEMA and used, for example, to assess how changes in network operating and investment costs would affect future allowed revenues and economic results. Typical projects in which the model is used include network valuations, projections of network revenues and analyses of possible changes to network tariffs, regulation, staffing and efficiency etc.
We license the model to several grid companies that calculate their own allowed revenue for each year, including the compensation due to deviations between industry costs and revenues in previous years (t-2). All the steps involved in NVE’s revenue regulation are included in the model, including the DEA benchmarking, regression analysis, calibrated DEA results and total revenue limit.
We calibrate our network revenue model against NVE for both allowed revenues and more complex ratios such as income loss and the harmony effect of mergers. As a part of the model development process, we regularly engage with NVE to clarify questions related to the data and the application of the regulatory model, ensuring that the results are consistent with current regulatory and industry developments.