Cost reflectivity Sample Clauses

Cost reflectivity. Within the short term, and acknowledging this is already a simplification of reality, we may define an efficiency criterion related to the extent to which marginal revenues of RES operators reflect the marginal short term value of this production, or marginal short term supply cost in the system. There are a range of situations in this regard: from that where marginal revenues of RES generators are fully decoupled from the short term marginal system supply cost (FITs for instance), to the situation where these marginal revenues are 100% coincident with short term marginal supply costs (full market integration) because markets for RES result in fixed payments that do not depend on the level of power production by this generation. Cost causality exists if the remuneration received by RES producers in short term markets is paid by those agents which are not contributing to decarbonisation or RES objectives. This should result in more efficient – regarding the objectives - short term decisions made by, for example, producers, consumers or suppliers. An example of this are certificate schemes such as Renewable Portfolio Schemes or ROC/Green Certificate. Other support schemes may not have direct implications on who pays the costs of RES energy supply. Markets should in theory not exhibit liquidity problems. They should be as liquid as possible, thus enhancing competition. RES support schemes should not decrease the liquidity in short term- markets reducing the efficiency of the operation of the system, like Power Purchase Agreements (PPAs) or over-the-counter (OTC) types of contracts that reduce the amount of power transacted in short term markets. The reduction of liquidity brought about by these instruments shall be weighed against their benefits. Support payments could be computed in a harmonized way across areas and time. This would lead to the harmonization of unit support payments received by RES generation across the whole system and over the whole year. This is coherent with the fact that emissions or RES targets are defined over an overall region (country or continent), and time frame. In other words, the contribution to achieving a target of a specific energy unit of RES is the same no matter the localization of the generator or the time at which it has been produced within the defined region and timeframe. Both the way support payments are computed and the level of support payments for each RES technology could be harmonized, but not final prices earn...

Cost reflectivity. The Reference Tariffs reflect a recovery of efficient costs associated with delivering the Services of the Network. Benchmarking these costs against other providers shows that Allgas' costs are relatively low given the scale of the organisation. Built into the forecasts are incentive mechanisms for efficiency gains and these will pass directly to Users within this regulatory review period. Forecast operating and maintenance costs deliver efficiency gains each year over the five year term of the Access Arrangement as described in the Access Arrangement Information. These efficiency gains are to be achieved from a current cost base that is already relatively low when compared to similar Networks. • Efficient Pricing Signals – The revenues associated with the Reference Tariffs reflect economically efficient pricing principles. That is, the revenues for each of the Reference Tariffs have been set so that they are between incremental and stand-alone prices. If revenue falls below the incremental cost of supply for an End User the incentive for Allgas to connect similar Prospective End Users is removed. If revenue per End User exceeds the stand-alone costs of replicating the Reference Service there is a risk of bypass resulting in inefficient use of resources. Thus the Reference Tariffs have been structured so that resources are allocated efficiently. Within each of these Reference Tariffs some re-balancing will be required over a transitional period to ensure that the pricing for individual End Users also complies with efficiency criteria.