Belgian electricity regulator - valuation of national provider
Belgium had been restructuring its electricity industry to ensure compliance with the European Union's Electricity Directive, which requires the separation of the operation and control of electricity transmission from the generation and distribution of those assets. CREG, the industry regulator, had two main concerns: The level of compensation that the national electricity company, Electrabel, should receive from giving up its transmission assets and its transmission system operator business (creating a new and separate company); and what impact the financial compensation would have on electricity tariffs in Belgium.PricewaterhouseCoopers provided a diverse team of corporate finance and utility specialists to value Belgium's electricity transmission business, using three alternative approaches to business valuation. The team's first step was to create a set of financial data for the separated transmission business, using numbers derived from Electrabel's group accounts.
Having developed a pro-forma transmission business, PwC undertook a detailed assessment of the value of existing transmission system assets (working with PwC's engineering consultants and using both historic cost and current cost replacement values). The team then investigated the future investment required in the network and whether current tariffs would allow the electricity sector in Belgium to fund its growth in the longer term. In addition, PwC developed a financial and regulatory model to demonstrate the impact of asset valuation and depreciation approaches on transmission tariffs in Belgium.
