Regulating Energy for Sustainable Development THE NEW TARIFF METHODOLOGY

Transcription

1 Regulaing Energy for Susainable Developmen THE NEW TRI METHODOLOGY November 2015

2 Table of Conens 1 CHPTER I: DEINITIONS CHPTER II: COMPONENTS O THE TRI CHPTER III: BULK CUSTOMER SERVICE TRIS RTIONLE GENERTION COSTS LLOWED REVENUES OR TRNSMISSION LICENSEE LLOWED REVENUES OR SMO LICENSEE LLOWED REVENUES OR SB LICENSEE DETERMINTION O BULK CUSTOMER SERVICE TRI SETTLEMENT CHPTER IV: DISTRIBUTION ND CUSTOMER SERVICE TRIS LLOWED REVENUES DISTRIBUTION ND CUSTOMER SERVICE LICENSEE CRITERI OR DEINING THE TRI STRUCTURE CHPTER V: TRI ILING ND INORMTION DISCLOSURE SMO, SB, TRNSMISSION ND DISTRIBUTION ND CUSTOMER SERVICE LICENSES 5.2 BULK SUPPLY TRI WITHIN-YER DJUSTMENTS END-USERS TRI DJUSTMENTS CHPTER VI: VLIDITY ND IMPLEMENTTION RRGMENTS CHPTER VII: TRNSITION PROVISIONS

3 1 BBREVITIONS ND CRONYMS SMO sands for Sysem Marke Operaor. SB sands for Single Buyer. PP sands for Power Purchase greemen. IPP sands for Independen Power Producer. O&M sands for Operaion and Mainenance. RB sands for Regulaory sse Base. CPEX sands for Capial Expendiure. OPEX sands for Operaing Expendiure. CPI sand s for Consumer Price Index as published by he Naional Saisics Office. kwh sands for Kilowa-hour. MWK sands for Malawi Kwacha. TOU sands for Time of Use. 2 CHPTER I: DEINITIONS Bulk Cusomer Service Transacions and Sabilizaion ccoun means a marke sabilizaion accoun funded by end-users wih a las resor back-up from he Governmen aimed a avoiding volailiy in end-users ariffs. Regulaor means he Malawi Energy Regulaory uhoriy (MER). Depreciaed opimized replacemen value means ha he regulaory asse base is "re-valued" o be equal o he price of building or buying a modern equivalen asse, depreciaed o reflec he shorer remaining life of he exising asses. n opimized sysem is a reconfigured sysem using modern echnology designed o serve he curren load wih curren echnology, wih some allowances for growh. This mehod excludes any unused or underuilized asses and allows for poenial cos savings ha may have resuled from echnological improvemen. Disribuion means he conveyance of elecriciy a less han 66,000 vols, or as may be prescribed by noice in he Gazee, from he ransmission grid o cusomers hrough a disribuion power sysem, and he erms disribue and disribuing have corresponding meanings. Economic value of he asses means he value of an asse derived from is abiliy o generae income. Eligible cusomer means an end-user elecriciy cusomer ha can freely choose a supplier and negoiae he elecriciy price. 3

4 ESCOM Ld. means he Elecriciy Supply Corporaion of Malawi. Generaion Plan means he elecriciy generaing faciliy and equipmen locaed a a single Sie, comprising generaing equipmen, subsaion and all proecive, connecing, associaed or ancillary plan, equipmen or buildings. Licensee means a holder of a licence graned or deemed o be graned by he uhoriy under he Energy Regulaion c, for he generaion, ransmission, disribuion, SMI, SB, imporaion or exporaion of elecriciy. Ne Impors means he difference beween impors and expors of elecriciy form Malawi o anoher counry. Power Purchase greemen or PP means a conrac beween a generaor and he Single Buyer license o buy elecriciy for a pre-esablished period of ime. Regulaory Year means a period commencing on 1s of July of a calendar year and ending on 30 h of June of he subsequen calendar year. Tariff Period means a muli-year period fixed by The Regulaor from ime o ime, usually 4 years, for which he principles of deerminaion of revenue requiremen and ariff will be fixed. Tariff Schedule means he end-user ariffs. Transmission means he conveyance of elecriciy a 66,000 vols or more, or as may be prescribed by noice published in he Gazee, from generaors or impor poins o disribuors or large cusomers or expor poins hrough a ransmission power sysem, and he erms ransmi and ransmiing have corresponding meanings. Transmission Cusomers are hose cusomers conneced o he ransmission grid. 3 CHPTER II: COMPONENTS O THE TRI This Tariff Mehodology is issued in compliance wih he principles included in Condiions (16), (17) and (18) of he Elecriciy c. The Tariff Schedule shall: (a) be in a form which shall be approved by he Regulaor considering he principles of: I. predicabiliy of adjusmens, II. III. IV. financial susainabiliy of licensees, price sabiliy, equiy and fairness, 4

5 V. cos of service, VI. VII. improving qualiy of service, and considering he value of he Malawi Kwacha in relaion o foreign currencies. (b) conain such deail as shall be necessary o enable any cusomer o make a reasonable esimae of he charges o which he would become liable for purchases of elecriciy; (c) be se a levels sufficien o allow he licensee an opporuniy o recover his coss of service, including a reasonable reurn on capial and encourage efficiency; (d) be se excluding expenses ha canno be reasonably associaed wih he supply of elecriciy; and (e) separaely idenify in is deerminaion: I. he componen of he ariff relaing o he use of he Licensee s Disribuion Sysem and Cusomer Service o end-users; II. III. IV. he componen of he ariff relaing o he use of he Transmission Sysem; he componen of he ariff relaing o he Sysem and Marke Operaion (hereinafer SMO); he componen of he ariff relaing o Single Buyer (hereinafer SB); and V. he componen of he ariff relaed o elecriciy generaion and impors. In his mehodology, he componens are grouped as follows: (a) The Bulk Cusomer Service Tariffs, I. ha are charged by he SB Licensee o he disribuion Licensee, II. ha include he componen of he ariff relaing o he use of he Transmission Sysem, Sysem and Marke Operaion and he componen of he ariff relaed o elecriciy generaion, as specified in Chaper III: Bulk Cusomer Service Tariffs; b) The Disribuion Tariff, ha includes he componen of he ariff relaing o he use of he Licensee s Disribuion Sysem and Cusomer Service o end user, as specified in Chaper IV: Disribuion and Cusomer Service ariffs. Transmission Cusomers shall only pay he Bulk Cusomer Service Tariff, while oher Cusomers shall pay a ariff comprising all five componens. SMO Licensee shall charge SMO ariffs o SB Licensee. Transmission Licensee shall charge ransmission ariffs o SB Licensee. Charges beween licensees shall be levied monhly. Where he wo licensees are separae legal eniies he charge will be made hrough an invoice and where he wo licensees operae wihin a single legal eniy he charge will be made hrough a journal voucher. 5

6 4 CHPTER III: BULK CUSTOMER SERVICE TRIS 4.1 RTIONLE The SB, pursuan o Condiion [X] of he SB License, shall deermine he Bulk Cusomer Service Tariffs by compuing he generaion coss, he ransmission coss, he SMO coss and SB coss according o he mehodology herein esablished, and submi hem o he Regulaor for approval. 4.2 GENERTION COSTS Srucure Elecriciy producion is a responsibiliy of he Generaion Licensees (hereinafer he Generaors ), licensed by he Regulaor. The energy and capaciy produced by he Generaors, shall be purchased by he SB Licensee. Prices for Capaciy and Energy sold by he Generaors and purchased by he SB Licensee are defined in he Power Purchase greemens (PPs) esablishing commercial condiions for such sales and purchases. Based on he prices esablished in he PPs and he quaniies generaed by each Generaor arising from he economic dispach performed by he SMO Licensee, he SB Licensee shall deermine he generaion coss ha shall be used o calculae he Bulk Cusomer Service Tariffs. The economic dispach performed by he SMO shall be subjec o he condiions saed in he marke rules Power Purchase greemens (PPs) There shall be wo ypes of PPs: (a) PPs beween each Independen Power Producer (IPPs) (exising or o be commissioned in he fuure) and he SB Licensee; (b) PPs beween each power plan belonging o [name of recenly unbundled] Generaion Licensee and he SB Licensee PPs wih IPPs The PPs wih IPPs shall be he agreemens signed beween such IPPs and he SB Licensee provided hey are approved by he uhoriy PPs wih [] Generaion Licensee Power Purchase greemens (PPs) shall be esablished beween he [] Generaion Licensee and he SB Licensee for each Generaion Plan, on he following basis: or exising Thermal Generaion or Thermal Generaion, he Generaion Licensee shall esablish, for each Generaion Plan included in he Generaion License, a PP wih a minimum duraion of fifeen (15) years. The price formula in such a PP shall be a wo-par ariff, comprising: 6

7 (a) a capaciy price, aimed a recovering fixed coss associaed wih each generaing Plan, including: I. Depreciaion of he asses in case he asses are no fully depreciaed. II. III. IV. Efficien O&M fixed coss, including adminisraive coss. fair and reasonable rae of reurn on asses on he non-depreciaed value of asses. or he purpose of calculaion if he capaciy charge, he iniial regulaory asse base shall be he exising economic value of he asses considering curren revenues for each power plan and exising operaion and mainenance coss. V. Taxes when applicable. VI. Capaciy prices shall be recalculaed on an annual basis based on he crieria included in his mehodology and supplemenary guidelines ha he Regulaor may issue in he fuure. (b) energy price, aimed a recovering: I. fuel coss (including no load hea rae and incremenal hea rae); II. III. IV. efficien variable O&M coss; sarup coss; ohers as may deem needed; V. Energy prices shall be only adjused because of fuel cos changes every six monhs based on he crieria included in his mehodology and supplemenary guidelines ha he Regulaor may issue in he fuure or exising hydropower Generaion or Hydro Generaion, he Generaion Licensee shall esablish, for each Generaion Plan included in he Generaion License, a PP wih a minimum duraion of fifeen (15) years. The price formula in such a PP ake he form of a capaciy paymen. The capaciy price, aimed a recovering fixed coss associaed wih each generaing Plan, including: I. Depreciaion of he asses in case he asses are no fully depreciaed. II. III. IV. Efficien O&M coss, including adminisraive coss. fair and reasonable rae of reurn on asses on he non-depreciaed value of asses. or he purpose of calculaion of he capaciy charge, he iniial regulaory asse base shall be he exising economic value of he asses considering curren revenues for each power plan and exising operaion and mainenance coss. V. Taxes when applicable. VI. Capaciy prices shall be recalculaed on an annual basis based on he crieria included in his mehodology and supplemenary guidelines ha he Regulaor may issue in he fuure. 7

8 or new power plans The PPs wih [] Generaion Licensee regarding new power plans shall be he agreemens signed beween [] Generaion Licensee and he SB Licensee provided hey are approved by he uhoriy or major overhauls of exising faciliies Upon decision by SB Licensee, a case of a large overhauling of an exising faciliy shall be considered a cause for erminaion of exising PP. The new PPs o be signed beween SB Licensee and [] Generaion Licensee shall ensure he financial susainabiliy of he Generaion Licensee. ll agreemens shall be approved by he uhoriy iling and pproval of [] Generaion PPs for exising power plans Capaciy and energy prices for each [] Generaion PP, shall be prepared by he [] Generaion Licensee, and submied o he Regulaor by he SB Licensee for approval according o he filing procedure esablished by he Regulaor in accordance wih provisions in Chaper V: Tariff filing and informaion disclosure Indexaion Capaciy prices saed in each [] Generaion PP shall be recalculaed. No indexaion is allowed wihin he year. uel prices saed in each [] Generaion PP shall be indexed o fuel prices every six monhs based on he change in relevan fuel prices as provided by [local supplier o Licensee], or oher eniy, wih which he [] Generaion Licensee has enered ino a uel Supply greemen (S). 4.3 LLOWED REVENUES OR TRNSMISSION LICENSEE This secion of he Tariff Mehodology deals only wih he Transmission Business coss, revenues and ariffs. This secion of he mehodology defines: (a) ype of Tariff Mehodology for he Transmission Business; (b) he mehodology o deermine he Transmission Sysem llowed Revenue; (c) he allocaion mehodology, specifying how he Transmission Sysem llowed Revenue is charged o he users of he Transmission Sysem (hereinafer Transmission Users ) Type of Tariff Mehodology The Transmission Sysem llowed Revenue is he revenue ha he Transmission Licensee is allowed o collec from he Transmission Users for he use of he Transmission Sysem, excluding connecion charges 1. 1 Connecion coss will be direcly negoiaed beween he Transmission Licensee (Transmission Business) and he Transmission Users on a case by case basis. 8

9 llowed Revenue shall be calculaed based on a Muli-Year Tariff Sysem in which a cap on overall revenues shall be imposed during he ariff period regardless of he number of Transmission Users, energy ransmied, ec. The Tariff Period shall be four (4) years. Transmission Sysem llowed Revenue shall be annually adjused considering he facors conained in he Revenue Conrol ormula. The Transmission Licensee shall make a Tariff iling o he Regulaor based on he Tariff Mehodology esablished in his secion. (a) The Tariff iling shall be done before he commencemen of he Tariff Period and i shall include he approved cos componens and he Revenue Conrol ormula. (b) Once every year afer he iniial Tariff iling, a simplified filing shall be done o demonsrae ha he revenue conrol formulae are properly applied Transmission Base llowed Revenue The base allowed revenue shall be deermined for a Tariff Period. The Transmission Sysem llowed Revenue shall be calculaed based on a forecas cash flow for firm 2 discouned a he llowed Rae of Reurn on Capial for he Tariff Period, considering: (a) Iniial Regulaory sse Base (RB) (he value of he asses belonging o he Licensee o provide he ransmission service, excluding connecion asses); (b) Rolling forward of he iniial RB, considering Capial Expendiure (CPEX) for he period; (c) Depreciaion of exising non-depreciaed asses; (d) Reurn on capial; (e) Efficien operaional expendiure (OPEX); (f) Taxes Iniial Regulaory sse Base To compue he asses and heir valuaion, he depreciaed opimized replacemen value shall be calculaed based on he exising marke condiions and he used and useful asses o provide he service fulfilling he qualiy level requesed by he License and/or associaed regulaions issued by he uhoriy The asse base shall exclude he value of he subsidized asses paid for hrough donaions/grans or by cusomers. CPEX ha may have been incurred afer closing he annual accouns shall no be considered unil a new ariff is approved for he subsequen Tariff Period. The asse base shall include he working capial required o run he business. Working capial needs shall be filed by he Licensee and approved by he uhoriy. 2 The free cash flow each year under a cash flow for firm is calculaed as EBITD (earnings before ineres, axes, depreciaion and amorizaion) minus axes and CPEX. 9

10 Depreciaion llowance Depreciaion shall be calculaed on he sraigh line mehod and he depreciaion raes shall be hose ha are currenly used in he sauory accouns. Once an asse is fully depreciaed, i shall be removed from he gross value of he asses. Depreciaion allowance shall include he depreciaion of he asses financed by hird paries or graned on advanageous condiions Reurn on sses The calculaion of he Transmission llowed Revenue shall include a reurn on invesed capial. The Regulaor shall define which mehodology is used in each ariff review for defining he reurn on asses. The rae of reurn on asses shall be calculaed considering a weighed average of he cos of deb and equiy, employing he acual deb o asse raio. The rae of reurn on asses shall be defined by he Regulaor for each Tariff Period. sses financed by hird paries, graned on advanageous condiions (non-deb associaed or belowmarke ineres raes), shall no be recognized wih any reurn on asses Capial Expendiure (CPEX) llowance RB shall be deermined for every year of he Tariff Period. The closing value (value a he end of one year) of he RB is se equal o he opening value of he RB plus he CPEX during he year, minus regulaory depreciaion during he year. The orecas CPEX program for he Transmission Licensee shall be he Transmission Developmen Plan approved by he Regulaor for he nex 4 years. The CPEX program shall include boh load-relaed CPEX and non-load relaed CPEX Treamen of Differences beween orecas CPEX and cual CPEX Every year during he Tariff Period, he Regulaor will conduc an ex-pos analysis, checking wha CPEX has acually been incurred. (a) In case of underinvesmen in relaion o he forecas CPEX included in he filing for he Transmission llowed Revenue, he difference will be fully clawed-back including he ime value of money, a a rae defined by he uhoriy and ransferred o cusomers hrough ariffs in he following Tariff Period provided ha he cumulaed effec on he allowed revenue calculaed using he acual CPEX be lower han 10%. (b) In case he acual CPEX is higher han he forecas, he Regulaor will reques for all he relevan informaion o deermine wheher he addiional invesmen has been pruden and efficien, and he difference will be allowed, including he ime value of money a a rae defined by he uhoriy, and ransferred o cusomers hrough ariffs in he following Tariff Period provided ha he cumulaed effec on he allowed revenue calculaed using he acual CPEX be lower han 10%. (c) In he cases he cumulaed effec on he allowed revenue calculaed using he acual CPEX be higher han 10% in any sign, he deviaion shall be fully clawed-back, and ransferred o cusomers hrough ariffs in he following year of he Tariff Period. 10

11 Operaing Expendiure (OPEX) and adminisraive coss The OPEX o be included in he calculaion of he Transmission Base llowed Revenue shall be he OPEX forecas for he ariff period by he Transmission Licensee. The Licensee shall jusify he OPEX forecas based on he forecas demand increase and he acual OPEX of he audied accouns of he las financial year. This OPEX shall include he expendiure on License requiremens (levies, insurance, ec.), he efficien cos of operaing he Transmission Sysem and he required adminisraive coss of he uiliy. The OPEX componen of he Transmission Base llowed Revenue shall be adjused a a rae defined by an Efficiency facor (OPEXX) per year during he Tariff Period. OPEXX (%) shall be fixed by he Regulaor before he commencemen of he Tariff Period. or successive Tariff Periods, he Regulaor may revise he mehodology for compuing he efficien OPEX o be included in he Transmission Base llowed Revenue Taxes ll axes applicable o he Transmission Business and imposed by he relevan Tax Laws and Regulaions shall be included in he ariff filing, ogeher wih he proposed adjusmen mechanisms in case he ax scheme changes during he Tariff Period djusmens o Transmission Base llowed Revenues The adjusmen mechanisms are inended o adjus he Transmission Base llowed Revenue wihin he Tariff Period, o accoun for inflaion and exchange rae variaions. The adjusmen shall be based on wo indices: (i) Malawi Consumer Price Index (CPI) and (ii) foreign exchange (KWCH : USD) rae. Weighs o be used for each one of hem shall be proposed by he Transmission Licensee for approval as a par of he ariff filing Revenue Conrol ormula Based on he previous definiions, he following conrol formula will be applied o he ransmission base allowed revenue: R y = R y X y 1 (1 X ) a (1 + CPI y 1) + (1 a) X y 1 where: R y llowed Base Revenue in year y R y-1 llowed Base Revenue in year y-1 a Share of local coss in oal coss of he Transmission Licensee o be approved by he Regulaor based on he filing by Transmission Licensee. CPI y-1 ccumulaed change in Consumer Price Index (%) during year y-1 X y/x y-1 verage change in he KWCH : USD exchange rae during las quarer of year y-1 X OPEXX (%) 11

12 ll aspecs requiring deailed procedures for implemenaion of his formula wih regard o availabiliy and sources of indices shall be proposed by he Transmission Licensee along wih he ariff filling, and would be subjec o Regulaory approval iling Tariffs and required informaion, shall be submied o he Regulaor by he Transmission Licensee for approval according o he filing procedure esablished by he Regulaor in accordance wih provisions in ChapTer V: Tariff filing and informaion disclosure Technical Losses Technical losses in he Transmission Sysem will be allowed o be he passed-hrough o Bulk Cusomer Service Tariffs. The forecas ransmission losses shall be calculaed by he SMO Licensee as a par of he nnual Operaing Plan, and he acual ransmission losses shall be measured hrough he meering sysem. In he even ha he meering sysem is no available, he Regulaor may allow he Transmission Licensee o use forecas ransmission losses for deermining he Bulk Cusomer Service Tariffs. The Regulaor may esablish a cap for he maximum losses in he Transmission Sysem llocaion Mehodology Transmission Sysem llowed Revenue shall be colleced in he form of a Transmission Tariff, only from he SB Licensee. The Transmission Tariff shall be in he form of a one-par capaciy charge. Deails for is calculaion are included in he Bulk Cusomer Service Tariff Secion Reacive Power Tariffs The Regulaor may esablish a compensaion mechanism for reacive power hrough a Reacive Power Tariff, if deemed necessary. 4.4 LLOWED REVENUES OR SMO LICENSEE Type of Tariff Mehodology The SMO llowed Revenue is he revenue ha he SMO Licensee is allowed o collec due o is aciviy. SMO llowed Revenue shall be calculaed based on a Muli-Year Tariff Sysem in which a cap on overall revenues shall be imposed during he ariff period. The Tariff Period shall be four (4) years. The SMO shall make a ariff filing o he Regulaor based on he mehodology esablished in his secion, in he following way: (a) Before he beginning of he Tariff Period, he filing shall be complee, including approval of cos componens and Revenue Conrol ormulae. (b) Once a year afer he iniial filing, during he Tariff Period, a simplified filing wih he purpose of demonsraing ha he Revenue Conrol ormulae are properly applied. 12

13 4.4.2 SMO llowed Revenue The SMO llowed Revenue shall be calculaed based on a forecas cash flow for firm for he ariff period, considering: (a) Iniial Regulaory sse Base (RB) (he value of he asses belonging o he Licensee o provide he service). (b) Rolling forward of he iniial regulaory asse base, considering he forecas CPEX for he period. (c) Depreciaion of exising non-depreciaed asses. (d) Reurn on capial. (e) Efficien operaional expendiure (OPEX). (f) Taxes. Calculaion of llowed Revenues shall ake ino accoun he non-regulaed revenues ha may exis Iniial Regulaory sse Base To compue he asses and heir valuaion, he depreciaed opimized replacemen value shall be calculaed based on he exising marke condiions and he used and useful asses o provide he service fulfilling he qualiy level requesed by he License and/or associaed regulaions issued by he uhoriy. The asse base shall exclude he value of he subsidized asses paid for hrough donaions/grans or by cusomers. CPEX ha may have been incurred afer closing he annual accouns shall no be considered unil a new ariff is approved for he subsequen Tariff Period Depreciaion llowance Depreciaion shall be calculaed on he sraigh line mehod and he depreciaion raes shall be hose ha are currenly used in he sauory accouns. Once an asse is fully depreciaed, i shall be removed from he gross value of he asses. Depreciaion allowance shall include he depreciaion of he asses financed by hird paries or graned on advanageous condiions Reurn on sses The calculaion of he SMO llowed Revenue shall include a reurn on invesed capial. The Regulaor shall define which mehodology is used in each ariff review for defining he reurn on asses. The rae of reurn on asses shall be calculaed considering a weighed average of he cos of deb and equiy employing he acual deb o asse raio. The rae of reurn on asses shall be defined by he Regulaor for each ariff period. sses financed by hird paries, graned on advanageous condiions (non-deb associaed or belowmarke ineres raes), shall no be recognized wih any reurn on asses Capial Expendiure (CPEX) llowance RB shall be deermined for every year of he ariff period. The closing value (value a he end of one year) of he RB is se equal o he opening value of he RB plus he CPEX during he year, minus regulaory depreciaion during he year. 13

14 The forecas CPEX program for he SMO Licensee shall be based on he 4-year Plan developed by he SMO Licensee approved by he uhoriy Operaing Expendiure (OPEX) and adminisraive coss The OPEX o be included in he calculaion of he SMO llowed Revenue shall be he forecas OPEX for he ariff period by he Licensee. The Licensee shall jusify he forecas based on he acual OPEX in he audied accouns of he las financial year. This OPEX shall include he expendiure on License requiremens (levies, insurance, ec), he efficien cos of operaion and he required adminisraive coss of he uiliy. The OPEX componen of he base allowed revenue shall be adjused a a rae defined by an Efficiency acor (OPEXX) per year during he following years unil he end of he ariff period. OPEXX (%) shall be fixed by he Regulaor before he sar of he ariff period. In successive Tariff Periods, he Regulaor may revise he mehodology for compuing he efficien OPEX o be included in he SMO llowed Revenue Taxes ll axes applicable o he SMO business and imposed by he Tax Laws and Regulaions shall be included in he ariff filing, ogeher wih he proposed adjusmen mechanisms in case he ax scheme changes during he Tariff Period djusmens The adjusmen mechanisms are inended o adjus he SMO llowed Revenue wihin he Tariff Period for inflaion and exchange rae variaions. The adjusmen shall be based on wo indices: (i) Consumer Price Index (CPI) and (ii) foreign exchange (KWCH:USD) rae. Based on he filed shares by he SMO Licensee, he Regulaor will approve he share o be employed in he revenue conrol formula Revenue Conrol ormula Based on he previous definiions, he following conrol formula shall be applied o he SMO llowed Revenue: where: R y R y-1 a CPI y-1 X y/x y-1 X R y = R (1 X ) a (1 + CPI) + (1 a y 1 ) X X y llowed base revenue in year y (MWK) llowed base revenue in year y-1 (MWK) share of local coss in oal coss of TL o be approved by he Regulaor based on he filing by TL. accumulaed change Consumer Price Index (%) of year y-1 verage change in he Malawi KWCH:USD exchange rae of year y-1 Efficiency facor (%) is he ranslaion of OPEXX in erms of oal revenues y 1 14

15 4.4.3 iling Tariffs and required informaion, shall be submied o he Regulaor by he SMO Licensee for approval according o he filing procedure esablished by he Regulaor in accordance wih provisions in Chaper V. 4.5 LLOWED REVENUES OR SB LICENSEE This secion esablishes he allowed revenues for he SB Licensee required for performing he duies of he Single Buyer in he corresponding License. The allowed revenue for he SB Licensee shall include he following wo main componens: (a) The allowed revenue required for operaion of Single buyer Business (b) The working capial allowance for he Bulk Cusomer Service Transacions and sabilizaion ccoun llowed Revenue Required for Operaion of Single buyer Business Type of Tariff Mehodology The SB llowed Revenue is he revenue ha he SB Licensee is allowed o collec due o is aciviy SB llowed Revenue shall be calculaed based on a Muli-Year Tariff Sysem in which a cap on overall revenues shall be imposed during he ariff period. The Tariff Period shall be four (4) years. The SB shall make a ariff filing o he Regulaor based on he mehodology esablished in his secion, in he following way: (a) before he beginning of he Tariff Period, he filing shall be complee, including approval of cos componens and Revenue Conrol ormulae. (b) once a year afer he iniial filing, during he Tariff Period, a simplified filing wih he purpose of demonsraing ha he Revenue Conrol ormulae are properly applied SB llowed Revenue The SMO llowed Revenue shall be calculaed based on a forecas cash flow for firm for he ariff period, considering: (a) Iniial Regulaory sse Base (SB) (he value of he asses belonging o he Licensee o provide he service). (b) Rolling forward of he iniial regulaory asse base, considering he forecas CPEX for he period (c) Depreciaion of exising non-depreciaed asses (d) Reurn on capial (e) Efficien operaional expendiure (OPEX) (f) Taxes Calculaion of llowed Revenues shall ake ino accoun he non-regulaed revenues ha may exis. 15

16 Iniial Regulaory sse Base To compue he asses and heir valuaion, he depreciaed opimized replacemen value shall be calculaed based on he exising marke condiions and he used and useful asses o provide he service fulfilling he qualiy level requesed by he License and/or associaed regulaions issued by he uhoriy The asse base shall exclude he value of he subsidized asses paid for hrough donaions/grans or by cusomers. CPEX ha may have been incurred afer closing he annual accouns shall no be considered unil a new ariff is approved for he subsequen Tariff Period. The asse base shall include he working capial required o run he business. Working capial needs shall be filed by he Licensee and approved by he uhoriy Depreciaion llowance Depreciaion shall be calculaed on he sraigh line mehod and he depreciaion raes shall be hose ha are currenly used in he sauory accouns. Once an asse is fully depreciaed, i shall be removed from he gross value of he asses. Depreciaion allowance shall include he depreciaion of he asses financed by hird paries or graned on advanageous condiions Reurn on sses The calculaion of he SB llowed Revenue shall include a reurn on invesed capial. The Regulaor shall define which mehodology is used in each ariff review for defining he reurn on asses. The rae of reurn on asses shall be calculaed considering a weighed average of he cos of deb and equiy employing he acual deb o asse raio. The rae of reurn on asses shall be defined by he Regulaor for each ariff period. sses financed by hird paries, graned on advanageous condiions (non-deb associaed or belowmarke ineres raes), shall no be recognized wih any reurn on sses Capial Expendiure (CPEX) llowance RB shall be deermined for every year of he Tariff Period. The closing value (value a he end of one year) of he RB is se equal o he opening value of he RB plus he CPEX during he year, minus regulaory depreciaion during he year. The forecas CPEX program for he SB Licensee shall be based on he 4-year Plan developed by he SB Licensee and approved by uhoriy Operaing Expendiure (OPEX) and dminisraive coss The OPEX o be included in he calculaion of he SB llowed Revenue shall be he forecas OPEX for he ariff period by he Licensee. The Licensee shall jusify he forecas based on he acual OPEX in he audied accouns of he las financial year. This OPEX shall include he expendiure on License requiremens (levies, insurance, ec), he efficien cos he SB aciviy and he required adminisraive coss of he uiliy. 16

17 The OPEX componen of he base allowed revenue shall be adjused a a rae defined by an Efficiency acor (OPEXX) per year during he Tariff Period. OPEXX (%) shall be fixed by he Regulaor before he sar of he ariff period. or successive Tariff Periods, he Regulaor may revise he mehodology for compuing he efficien OPEX o be included in he SB llowed Revenue Taxes ll axes applicable o he SB business and imposed by he relevan Tax Laws and Regulaions shall be included in he ariff filing, ogeher wih he proposed adjusmen mechanisms in case he ax scheme changes during he Tariff Period djusmens The adjusmen mechanisms are inended o adjus he SB llowed Revenue wihin he Tariff Period for inflaion and exchange rae variaions. The adjusmen shall be based on wo indices: (i) Consumer Price Index (CPI) and (ii) foreign exchange (KWCH : USD) rae. Weighs o be used for each one of hem shall be proposed by he SB for approval as a par of he ariff filing Revenue Conrol ormula Based on he previous definiions, he following conrol formula shall be applied o he SB llowed Revenue: X y R y = Ry 1 (1 X ) a (1 + CPI) + (1 a) X y 1 where: R y R y-1 a CPI y-1 X y/x y-1 X llowed base revenue in year y (MWK) llowed base revenue in year y-1 (MWK) share of local coss in oal coss of TL o be approved by he Regulaor based on he filing by TL. accumulaed change Consumer Price Index (%) of year y-1 verage change in he Malawi KWCH: USD exchange rae of year y-1 Efficiency facor (%) is he ranslaion of OPEXX in erms of oal revenues Bulk Cusomer Service Transacions ccoun The Bulk Cusomer Service Transacions ccoun shall be used o sele ransacions beween he SB Licensee and he following paries: (a) Transmission Licensee; (b) Generaion Licensees; (c) SMO Licensee; (d) Disribuion Licensee; (e) Transmission Cusomers. 17

18 In his accoun, he following ransacions shall ake place: (a) Paymens made by he Disribuion Licensee and Transmission Cusomers for he purchase of Bulk Cusomer Service Elecriciy; (b) Paymens o he Transmission Licensee; (c) Paymens o he SMO Licensee; (d) Paymens o Generaion Licensees for selling of generaion according o he PPs; (e) Oher ransacions as direced by he uhoriy Working Capial llowance for he Bulk Cusomer Service Transacions and Sabilizaion ccoun The Bulk Cusomer Service Transacions and Sabilizaion ccoun requires working capial in form of coningen cash, as here is he probabiliy ha he forecas Bulk Cusomer Service Tariff o be differen from acual. The allowed Bulk Cusomer Service Transacions and Sabilizaion ccoun Working Capial shall be used as liquid capial o make effecive he paymens o he Crediors when needed. The SB Licensee in coordinaion wih he Governmen of Malawi shall implemen he Transacions and Sabilizaion ccoun o ensure ha he working capial is adequae o mee paymens needs in all cases. The Transacions and Sabilizaion ccoun shall be a ring-fenced accoun managed by SB Licensee and funded hrough end-user ariffs. Las resor funding shall be provided by he Governmen of Malawi. The SB License shall file for an increase in ariffs o guaranee he funding of he Transacions and Sabilizaion ccoun as long as he available funds are lower han he 10% of he expeced 6 monhs cumulaed paymens form he ccoun. SB Licensee may provide liquidiy in case of deviaions from he forecas Bulk Cusomer Service Tariff or under any unexpeced emergency siuaion. In his case, he SB shall be compensaed due o he addiional financial burden a cos. The Regulaor shall approve any provision of liquidiy by he PB Licensee. The Bulk Cusomer Service Transacions and Sabilizaion ccoun liquidiy may be invesed in a pruden and efficien way following he guidelines ha he Regulaor shall issue. uomaic adjusmen of he end-user ariffs shall be implemened in he case of a oal depleion of he Bulk Cusomer Service Transacions and Sabilizaion ccoun SB Licensee Limied Liabiliy The SB Licensee shall make paymens from he funds available in he Bulk Cusomer Service Transacions and sabilizaion ccoun. In siuaions of cash shorfalls, he SB Licensee liabiliy shall be limied o he funds available in he Bulk Cusomer Service Transacions and sabilizaion ccoun. 18

19 The managemen of his accoun shall be esablished by he Regulaor hrough Bulk Cusomer Service Transacions ccoun Managemen Guidelines in cooperaion wih he oher licensees and he Governmen of Malawi iling Tariffs and required informaion, shall be submied o he Regulaor by he SB Licensee for approval according o he filing procedure esablished by he Regulaor in accordance wih provisions in Chaper V. 4.6 DETERMINTION O BULK CUSTOMER SERVICE TRI Srucure Bulk Cusomer Service Tariffs shall be he sum of he following componens: (a) Generaion ariff (b) Transmission ariff (c) SMO ariff (d) SB Business ariff Each componen shall be deermined following he rules esablished in his mehodology for heir deerminaion. Bulk Cusomer Service Tariffs shall be of wo pars: (a) capaciy charge (b) energy charge The energy charge shall vary according o wo inervals as follows: (a) Peak, from [] o [] (b) Off-peak, from [] o [] orecas Bulk Cusomer Service Tariffs The orecas Bulk Cusomer Service Tariffs will be used o deermine he end use cusomer ariffs. The orecas Bulk Cusomer Service Tariffs will be passed hrough o he end use cusomer ariffs according o he mehodology defined in The orecas Bulk Cusomer Service Tariffs are calculaed and filed once every six monhs by he SB Licensee, following he procedure defined in his mehodology. The orecas Bulk Cusomer Service Tariffs include he forecas for he corresponding six-monh period and an adjusmen facor o compensae he differences beween he forecas and acual Bulk Cusomer Service Tariffs orecas Generaion Coss Generaion Coss, shall have wo componens: (a) Capaciy Coss; (b) Energy Coss. 19

20 orecas Generaion Capaciy Cos The orecas Generaion Capaciy Cos shall be deermined once in every six-monh period and shall be equal o he sum of he forecas capaciy paymens o Generaors, based on a monhly simulaion of capaciy paymens under each PP. The orecas Generaion Capaciy Tariff for he period shall be equal o he orecas Generaion Capaciy Cos divided by he orecas Sysem Coinciden Peak Demand (MW) for he six-monh period. GC y, p N CPy ; p; n n = [ MKW ] P MW y, p GC, y p : orecas Generaion Capaciy Tariff CP y ; p ; n : orecas capaciy paymen for year y, six monh period p and generaor n P y, p : orecas Sysem Peak Demand for year y, six monh period p meered a each poin of delivery o he Disribuion Licensee and Transmission Cusomers. : orecas N : ll generaors orecas Generaion Energy Coss The SB Licensee shall deermine he forecas oal coss, by adding he forecas energy paymen o all Generaion Licensees and ne impors according o heir forecas energy delivered in all hours and he energy prices saed in PPs. This forecas shall consider: (a) The forecas fuel prices provided by [] or oher suppliers and he uel Supply greemens (b) generaion dispach schedule developed for he purpose of seing he Bulk Cusomer Service Tariff. This dispach should be based on an nnual Operaing Plan for a period of 12- monhs ahead, considering a probabiliy of occurrence of 70%, and he bes available informaion abou he sorage level of reservoirs and planned mainenance of Generaing Plans. This informaion should be made available by SMO Licensee in due ime and according o he Marke rules. (c) monhly simulaion of he energy-relaed paymens under each PP. (d) orecas for ne impor/expor coss. This oal orecas Generaion Energy Coss divided by he oal forecas energy purchased by he disribuion licensee and ransmission cusomers during he six monh period, will provide he forecas average energy ariff. 20

21 N EGy, p; n; EPy ; p; n; + IC p n = 1 ; p = N [ MKW ] MWh EGy, p; n; + NI p GE y 6 6 n = 1 Where, GE ; y p : orecas Generaion Energy ariff for he six-monh period p EG y, p ; n ; : orecas Energy Generaed for he six monh period p by Generaor n during monh EP y; p; n; : orecas Energy ariff according o he PP for he Generaor n in he monh of he sixmonh period p and he Energy impor coss. NI p: orecas Ne Impored Energy in he period p IC p: orecas Ne Impored Energy Cos in he period p : orecas N : ll Generaors : Monh orecas Transmission Tariff The orecas Transmission ariff shall have wo componens: (a) orecas Transmission Capaciy Tariff (b) orecas Transmission Loss acor orecas Transmission Capaciy Tariff The SB Licensee shall deermine he orecas Transmission Capaciy ariff per monh for each year of he Tariff Period by dividing he Transmission Sysem llowed Revenues by he forecas Sysem Peak Demand (MW) for he period according o he nnual Operaing Plan, in accordance wih he equaion given below, assuming ha he oal ransmission revenues are evenly recovered in each monh. TR y; p 1 12 TSR P = [ MKW ] y y, p MW Where, TR ; y p : orecas Transmission Capaciy ariff per monh for year y, six monh period p TSR y : Transmission Sysem llowed Revenues year y P y, p : orecas Sysem Peak Demand for year y, six monh period p meered a delivery poins o he Disribuion Licensee and Transmission Cusomers. 21

22 orecas Transmission Loss acor The SB Licensee shall deermine he orecas Transmission Loss acor for each Time Inerval according o he following mehodology: Where (a) Based on he dispach simulaion provided by SMO Licensee, he SB Licensee shall calculae he forecas oal losses for each Time Inerval, by subracing from he oal energy received by he Transmission Sysem, he oal energy supplied from he Transmission Sysem o he Disribuion Licensee and Bulk Cusomer Service Cusomers. (b) The orecas Transmission Loss acor shall be deermined for each Time Inerval by dividing he orecas Toal Losses per Time Inerval by he orecas Energy Supplied per Time Inerval. TL y, p, h TLy = M ES m, p, h y, p; m; h TL y, p, h : orecas Transmission Loss acor, for year y, six monh period p and Time Inerval h TL,, : orecas Toal Transmission Losses for Time Inerval h, for year y, six monh period p y p h M m ES : Toal orecas Energy Supplied in year y, six monh period p o he Disribuion, ; y p; m h Licensee or Transmission Cusomer m in Time Inerval h M : Disribuion Licensee and ransmission Cusomers h : Time Inervals 1, 2 The Regulaor has he righ o impose a cap on TL y, p, h o foser efficiency in he ransmission operaion orecas SB Business ariff The SB Licensee shall deermine he orecas SB Business ariff for each monh for he period, in accordance wih he equaion given below, by dividing he SB Business llowed Revenues by he forecas Sysem Peak Demand (MW) according o he nnual Operaing Plan, presuming ha he oal SB Business revenues are evenly recovered in each monh. BSS y, p 1 12 BSOB P y y, p = [ MKW ] MW Where, BSS, y p : orecas SB Business ariff for six-monh period p of year y BSOB y : SB Business llowed Revenue for year y 22

23 P y, p : orecas Sysem Peak Demand for year y, six monh period p meered a delivery poins o he Disribuion Licensee and Transmission Cusomers orecas SMO ariff The SB Licensee shall deermine he orecas SMO ariff for each monh for he period, in accordance wih he equaion given below, by dividing he SMO llowed Revenues by he forecas Sysem Peak Demand (MW) according o he nnual Operaing Plan, presuming ha he oal SMO revenues are evenly recovered in each monh. SMOS y, p = 1 12 SMOB y y, p P [ MKW ] MW Where, SMOS, y p : orecas SMO ariff for six-monh period p of year y SMOB y : SMO llowed Revenue for year y P y, p : orecas Sysem Peak Demand for year y, six monh period p meered a delivery poins o he Disribuion Licensee and Transmission Cusomers Resuling forecas Bulk Cusomer Service Tariffs The wo-pars, wo- inerval forecas Bulk Cusomer Service Tariffs shall include: (a) The addiion of he ariffs of he differen componens. (b) n adjusing facor o compensae SB Licensee because of he differences beween forecas ariffs and acual ariffs. The calculaion of he forecas Bulk Cusomer Service Tariffs shall be as follows: Where, ( C) ( C) = GCy, p + TRy, p + BSS y, p + SMOS y, p DC( C y p [ MKW ] BST, y, p ) ( E1) = ( 1+ TLy, p,1) GE1y, p DC( E1 y p [ MKW ] BST y, p ), MWh ( E2) = ( 1+ TLy, p,2 ) GE2 y, p DC( E2 y p [ MKW ] BST y, p ), MWh BST y, p : orecas Bulk Cusomer Service Tariff (Capaciy) for year y and period p ( ) BST y, p E1 : cual Bulk Cusomer Service Tariff (Energy in peak Inerval 1) for year y and period p ( ) BST y, p E2 : cual Bulk Cusomer Service Tariff (Energy in off-peak Inerval 2) for year y and period p TL y, p, 1 1 ; TL 2 y, p, 2 : Transmission Loss acor for Time Inervals 1, 2 for year y and period p MW 23

24 DC C) : djusing componen for capaciy ariff for year y and period p as defined in ( y, p DC E1) ( y, p as defined in DC( E2) y, p p as defined in : djusing componen for Tariff (Energy in peak Inerval 1) for year y and period p : djusing componen for Tariff (Energy in off-peak Inerval 2) for year y and period cual Bulk Cusomer Service Tariffs cual Bulk Cusomer Service Tariffs shall be calculaed monhly in order o conrol for he deviaions from he forecas Bulk Cusomer Service Tariffs. Neverheless, adjusmens o he end-user ariffs shall only be applied if he accumulaed variaion is higher han 5% or if under a oal depleion of he sabilizaion accoun, as defined in cual Generaion Coss Generaion Coss, as defined in previous secion, shall have wo componens: (a) Capaciy Coss (b) Energy Coss cual Generaion Capaciy Coss The cual Generaion Capaciy Cos shall be deermined monhly and his shall be equal o he addiion of he acual capaciy paymens o Generaors based on he oucomes of he acual operaion regisered during he monh by he SMO. In cases when liquidaed damages apply, his amoun shall be discouned from he cual Generaion Capaciy Coss. The cual Generaion Capaciy ariff for he period, shall be equal o he cual Generaion Capaciy Cos divided by he cual Sysem Coinciden Peak Demand (MW) for he monh. GC = N n CP P, n [ MKW ] MW GC : cual Generaion Capaciy ariff for monh CP, n : cual Capaciy paymen for Generaor n in monh P : cual Sysem Monhly Peak Demand in monh meered a delivery poins o he Disribuion Licensee and Transmission Cusomers. : cual N : ll Generaors : cual monh 24

25 cual Generaion Energy Coss Based on he acual operaion regisered by he SMO Licensee, he SB Licensee shall deermine he acual oal monhly energy for each Time Inerval, by adding he acual energy paymens o all Generaing Plans coss in his monh, according o heir acual energy delivered in each Time Inerval and he energy prices saed in PPs plus he ne impor coss. This oal monhly acual Generaion Energy Coss divided by he oal acual energy delivered in each Time Inerval during he monh, will give he cual Energy ariff for each Time Inerval. N... EG ; n; h EP ; n + IC n h=... 1 = N [ MKW ] MWh EG ; n; h + NI GE... N n h= EG ; n; h EP ; n + IC n h=... 2 = N [ MKW ] MWh EG ; n; h + NI GE... n h=... Where, GE1 : cual Generaion Energy ariff for peak Inerval GE2 : cual Generaion Energy ariff for off-time Inerval EG ; n ; h : cual Energy Generaed by Generaor n during hours h of monh EP ; n : cual Energy ariff according o he PP, for Generaor n of monh NI : Ne Impored Energy IC : Ne Impored Energy Cos : cual N : ll Generaors h : Hours from o : cual monh cual Transmission Tariff The cual Transmission ariff shall have wo componens: (a) cual Transmission Capaciy ariff (b) cual Transmission Losses acor 25

26 cual Transmission Capaciy Tariff The SB Licensee shall deermine he cual Transmission ariff for he period by dividing he Transmission Sysem llowed Revenues by he cual Sysem Peak Demand (MW) regisered by he SMO for he monh, and divided by welve, assuming he oal Transmission Capaciy Coss are evenly recovered in each monh. Where, TR 1 12 TSR P = [ MKW ] y TR : cual Transmission Capaciy ariff for monh TSR y : Transmission Sysem llowed Revenues year y P : cual Sysem Coinciden Peak Demand for monh, meered a delivery poins o he Disribuion Licensee and Transmission Cusomers. MW cual Transmission Loss acor cual ransmission losses shall be considered as he forecas ones cual SB business ariff The SB Licensee shall deermine he cual SB Business Tariff for he period according o he following equaion, by dividing he SB Business llowed Revenue by he cual Coinciden Sysem Peak Demand (MW). 1 BSOB BSS = 12 P y [ MKW ] MW Where, BSS : cual SB business ariff for monh BSOB y : SB Business llowed Revenue for year y P : cual Sysem Coinciden Peak Demand for monh, meered a delivery poins o he Disribuion Licensee and Transmission Cusomers. : cual monh cual SMO ariff The SB Licensee shall deermine he cual SMO Tariff for he period according o he following equaion, by dividing he SMO llowed Revenue by he cual Coinciden Sysem Peak Demand (MW). 1 SMOB SMOS = 12 P y [ MKW ] MW Where, 26

27 SMOS : cual SMO ariff for monh SMOB y : SMO llowed Revenue for year y P : cual Sysem Coinciden Peak Demand for monh, meered a delivery poins o he Disribuion Licensee and Transmission Cusomers. : cual monh Resuling cual Bulk Cusomer Service Tariffs The wo-pars, wo- inerval cual Bulk Cusomer Service Tariffs shall be: Where, ( C) GC + TR + BSS SMOS BST + = [ LKR ] ( E ) ( 1+ TL ) GE BST 1 MW 1 =, 1 [ LKR ] MWh ( E ) ( 1+ TL ) GE BST 2 2 =, 2 [ LKR ] MWh BST ( C) : cual Bulk Cusomer Service Tariff (Capaciy) for monh BST ( E1) : cual Bulk Cusomer Service Tariff (Energy in peak Inerval 1) for monh BST ( E2) : cual Bulk Cusomer Service Tariff (Energy in off-peak Inerval 2) for monh : cual monh djusing Componens The adjusing componens defined in shall be calculaed as follows: 6 1 ( ) ) DC y; p( C) = P, p 2 BSTy; p 2( C) BSTy;, p 2( C) (1 + r p 1 [ MKW ] = 1 P y, p MW DC 1 ( ) (1 r ) 6 y; p( E1) = EG,1, p 2 BSTy; p 2( E1) BSTy;, p 2( E1) + p 1 = 1 EGy;1, p [ MKW ] MWh DC 1 ( ) (1 r ) 6 y; p( E2) = EG,2, p 2 BSTy; p 2( E2) BSTy;, p 2( E2) + p 1 = 1 EGy;2, p [ MKW ] MWh Where, 27

28 r p-1 : verage reference Ineres rae of six monh period p-1 o be defined by he uhoriy EG y, 1, p ; EG y 2, p, : orecas energy generaed for y including ne impors, six monh period p in ime inerval 1 and 2. ll oher parameers have been previously defined. 4.7 SETTLEMENT Transacions wih Generaion Licensees Generaion Licensees shall send monhly invoices o he SB Licensee, discriminaing Capaciy Coss and Energy Coss, according o he provisions of he PPs. The invoices shall indicae energy delivered o he Transmission Sysem by he generaing plans, hourly discriminaed and based on measuremens obained hrough he meering sysem approved in compliance wih he Marke Rules, number of sar-ups, hours of no load cos, hours of incremened hea rae, ec., according o official records acceped by he SMO. On he paymen due dae, he SB Licensee shall proceed o make he paymen ou of he Bulk Cusomer Service Transacions ccoun according o he Bulk Cusomer Service Transacions and Sabilizaion ccoun Managemen Rules Transacions wih he Disribuion Licensee and Transmission Cusomers The SB Licensee shall charge he Disribuion Licensee and Transmission Cusomers, hrough an invoice or journal voucher as appropriae, based on he physical informaion and he forecas Bulk Cusomer Service Tariffs for he corresponding monh no laer han [] of each monh. The Disribuion Licensee and Transmission Cusomers shall deposi he due amouns in he Bulk Cusomer Service Transacions and Sabilizaion ccoun no laer han [] of he corresponding monhs. Upon crediing of he funds in he accoun, he Bulk Supplier shall remi he corresponding receip Transacions wih he Transmission Licensee On he specific dae esablished by he uhoriy, he Transmission Licensee shall charge he SB Licensee, hrough an invoice or journal voucher as appropriae, he due amoun applicable for ha monh, consising of one welfh of he Transmission Sysem llowed Revenues for he year y ( TSR y ). On he due dae esablished by he uhoriy, he SB Licensee shall pay he due amoun o he Transmission Licensee ou of he Bulk Cusomer Service Transacions and Sabilizaion ccoun. Upon receiving he paymens, he Transmission Licensee shall acknowledge receip as appropriae Transacion wih he SMO Licensee On he specific dae approved by he uhoriy, he SMO Licensee shall ener is Invoice or journal voucher wih he due amoun applicable for ha monh, consising of one welfh of he SMO llowed Cos ino he Bulk Cusomer Service Transacions ccoun. 28