NERC approved the updated methodology for determining the price caps for electricity services

AB “Ignitis grupė” (hereinafter – the Group) informs that on 30 September 2021 National Energy Regulatory Council (hereinafter – NERC) adopted the new wording of the methodology for determining the price caps for electricity transmission, distribution and public supply services (hereinafter – the Methodology) (link in Lithuanian), the draft of which, public consultation regarding it and its potential impact to the activities of AB “Energijos skirstymo operatorius” (hereinafter – ESO) was disclosed by the Group in the material event notice of 17 September 2021 (link).

The new wording of the Methodology reflects a part of comments and proposals of the Group submitted during the public consultation and discussions with NERC. The most important changes, compared to the initial draft of the Methodology:

1. NERC can include additional component in the tariff, which will be calculated for both network maintenance and expansion CAPEX (instead of only maintenance CAPEX in the previous draft), set out in the 10-year investment plans of ESO, i.e., resulting in additional tariff component increase. The size of the additional tariff component will be calculated taking into account the sustainable leverage level of ESO (Paragraph 14 of the Methodology);

2. the recalculated amount of amortization and return on investments for 2016–2021, approximately amounting to EUR 160 million, may be deferred and deducted from revenues not longer than over three regulatory periods, in order to maintain a sustainable leverage level of ESO (Paragraphs 23.8, 25.2 and 25.3 of the Methodology).

Considering the changes indicated above, the Group preliminary expects that the negative impact of the regulatory change will be reduced and sustainable regulation will be pursued through mutual efforts of all stakeholders.

Considering that (i) due to the legal uncertainty of the new wording of the Methodology, the ultimate impact to financial results and activities of ESO and the Group will be evaluated only when NERC adopts the resolution on the price caps for electricity distribution services for the following regulatory period (2022–2026), which shall be adopted by no later than 15 October 2021 and (ii) in order to ensure equal rights for all shareholders to access uniform information, after NERC adopts the above mentioned resolution, the Group will inform about the ultimate impact to its activities in a separate notice through the stock exchange platforms.

The Group states that it will continue to endeavour to ensure the interests of the Group, its shareholders and other stakeholders by disclosing material information immediately and performing other necessary actions.

For more information please contact:

Artūras Ketlerius
Head of Public Relations at Ignitis Group
arturas.ketlerius@ignitis.lt
+370 620 76076