Framework of IBR
Overview
Incentive-Based Regulation (IBR) for gas facilities is a framework or mechanism established to regulate the piped gas supply industry effectively while promoting efficiency, cost management, and service quality. Gas facility tariff is set with built-in incentives to improve efficiency without sacrificing quality of service of utilities.
It is applied to licensed gas facility operators, including Transportation Licensees, Distribution Licensees, and Regasification Licensees. IBR allows a structured, transparent, and informed way of tariff setting, taking into requirement for capital expenditure (CAPEX) and operational
expenditure (OPEX) by the licensees.
IBR mechanism ensures that the licensees can continuously enhance their efficiencies andincrease transparency in providing gas supply to Users infull compliance with the projected expenditures. In addition, the Energy Commission continues to audit and review past performances as well as accommodate new requests from the licensees.
Base Tariff Determination
The base tariff is reviewed during each regulatory period, which currently occurs every three years, in accordance with the following building block formulae:
Allowed tariff
Allowed tariff is subject to annual review within the regulatory period through the tariff adjustment mechanism, to reconcile any deviations between forecasted parameters and actual outcomes.
