1. Tariffs and conditions for input of power
A main requirement for an efficient power market is free market access with non-discriminatory and objective tariffs and conditions. In accordance with this and current regulations, network companies are required to offer network access to everybody on request. However, the overall principles and rules for tarification must be taken into account. In this context, tariffs means all prices and other financial remuneration for connection and use of network installations.
2. Network connection
Connection requirement/investment requirement
Network companies with area lisence have a supply requirement, according to § 3-3 of the energy act. The supply requirement entails a connection requirement, but only for consuming customers.
However, the connection requirement does not give outtake customers the right to cost-free network connection, but entails a payment requirement for customer specific installations. Network companies do not have an equivalent connection requirement for producers.
For producers, the network company's only requirement will be to provide market access with non-discriminatory and objective tariffs and conditions. This means the network company is not required to provide necessary network installations between the producer and the connection point in the network company's network.
When connecting a producer to the existing overlying network, the network company can require that the producer himself builds, maintains and covers all costs related to the necessary customer specific installations. To this adds possible investments by need for increased capacity in the network company's network. The network company's rights to charge parts of these costs to the producer are regulated by the regulations concerning investment contribution.
Investment contribution
Network companies can require an investment contribution to cover construction costs of connecting new production or extending production capacity.
When a producer wants to connect, the network company must inform the customer about how the investment contribution is calculated and how it is charged. The main rule is that the calculation of the investment contribution is based on the costs following the connection or extention.
In cases where the connection causes reinforcement of installations with several network users, a pro rata share of these costs may be included in the investment contribution.
In so-called meshed networks, i.e. networks where it is difficult to attach the need for new investments to one particular customer, the network owner can usually not require an investment contribution. In general the current regulations give network companies the possibility to require investment contribution on all voltage levels.
The network company may distribute the investment contribution between customers that are connected at the time the installation is brought to completion and customers that will be connected at a later point in time, but no later than 10 years after completion of the installation. The network owner may do so either by charging the investment contribution as new customers are connected, or by advancing the investment costs and subsequently distributing them on a proportional basis on customers that in due course connect to the network.
To avoid over- or underdimensioning of the network, and following transferral of costs to producers, network companies will try to coordinate projects that occur at the same time, or are localised to a certain part of the network.
3. Tariffs for input from generation
Input tariffs are what the power producer must pay to feed in power in a network point.
All network companies shall use point tariffs as payment for transmission of electrical power. Point tariff means that a producer only pays transmission tariff to his local network company, independently of to whom he sells his power. The term transmission tariff is also used instead of point tariff.
Input tariffs are composed by several components: an energy component that varies with the customer's current input and other components that are a fixed amount.
Fixed component
The fixed component is independent of the customer's current input of power and shall give network companies sufficient income according to permitted income, which is fixed annually for each company by NVE. The central grid input tariff shall be normative for the fixed component by power input into regional and distribution networks. The central grid input tariff for 2008 is 0.56 øre/kWh.
Settled production volume shall be based on the power plant's median annual output. For power plants with installed capacity below 1 MW, settled volume shall at maximum be 30 percent of installed load capacity mulitiplied by 5,000 hours.
Norwegian transmission system operator, Statnett, has introduced a special reduced tariff of 0.1 øre/kWh for new production with favourable location for the network. Producers in selected network areas are offered such a tariff in agreement with Statnett.
Energy component
The energy component depends on the customer's current input of power. When power is transmitted, heat develops in lines and transformers, so that some of the power is lost. The energy component shall reflect costs of change in power loss when one extra kWh is transmitted (marginal loss). The loss increases with increased network use, and can become substantial when approaching capacity limits in the network. The energy component shall refer to the connection point.
Calculation
The energy component is calculated individually for each separate input point and is determined on basis of marginal loss costs in the whole network system. Marginal loss costs depends on loss rates in each separate point and the value of the network loss.
Network loss value is determined by the current power market price. For all exchange points with the central grid, marginal loss rates are determined. Each network company calculates loss rates in its own network, related to each input point. These are normally added to the loss rates in the central grid exchange point.
A producer can have a favourable location in the network, where increased production reduces network loss. In such cases the loss rate, and consequently the energy component, are negative. This means the producer is paid for power input. In areas with production surplus, input has a high loss rate and outtake a negative loss rate. In points with both outtake and input, loss rates shall be symmetric around zero. In the central grid, loss rates vary between +10 and ÷10 percent.
The energy component shall give customers a price signal indicating the cost of transmitting an extra kWh, in form of changed power loss. To obtain this, calculation of the energy component shall be based on estimated loss rates. Estimated loss rates shall be available for the producers, so that their production can be adjusted accordingly.
Since marginal losses change, the energy component shall be time-differentiated with periods for at least winter-day, winter night/weekend and summer. There are weekly calculations of marginal loss rates for central grid exchange points.
Information requirement
Tariffs and conditions shall be publicised in a separate brochure, or in other written information available to network customers.
Tariffs include all prices and other financial remuneration that the licensee establishes for connection to and use of electrical network installations.
The energy component is composed by marginal loss rate and current power price, and consequently it cannot be publicised in advance. The energy component's purpose is not to be known in advance, but that producers adapt according to the known marginal loss rate in each connection point and the current power market price. Network companies are therefore required to make marginal loss rates in each connection point available.
Network companies shall inform each network customer about tariff changes, within a reasonable period of time before the new tariffs become operative. The information shall include a reason for the tariff changes.
