Revenue caps
The gas networks, like other networks including electricity networks, are what are known as "natural monopolies", where effective competition is restricted or does not exist at all. As a rule, it does not make economic or business sense for several companies to build their own parallel gas infrastructure within the same supply area. This means, though, that there is no competitive pressure among the gas network operators. The operators are therefore subject to regulation to ensure that they do not make monopoly profits but still operate their networks as cost effectively as possible.
In the general interest (of private consumers, commercial and industrial customers, gas traders and suppliers), the tariffs for transporting gas must be calculated appropriately and transparently. Under the incentive regulatory regime, however, it is not the individual network tariffs (prices on the price list) but the costs of network operation that are assessed, and revenue caps are then set. The revenue allowed is sufficient to enable each company to fulfil its tasks as a gas network operator.
Ruling Chamber 9 carries out the following procedures, which all have an effect on setting the revenue caps:
revenue caps under section 4 ARegV
Evidence of particular hardship under section 34a ARegV
efficiency requirements under section 16(2) ARegV
capex mark-up under section 10a ARegV
regulatory account under section 5 ARegV
network transfers under section 26 ARegV
determinations on volatile costs under section 11(5) ARegV