It is widely recognized that the general
“financial climate” for energy networks infrastructure projects, i.e. their financial
viability, is significantly influenced by the applicable regulatory framework.
Being subject of price regulation, electricity and natural gas transmission
companies reimburse their capital and operational expenditures based on pricing
mechanisms (price controls) developed by the NRA.

Normally, well-designed price controls should
ensure recovery of all prudently incurred costs, including investment projects
costs, taking into consideration at least the average systematic risk of the
TSO’s investment portfolio via the regulator’s estimate of the cost of capital
(more precisely, equity risk premium, usually using firm’s beta23), but also
other risks depending on the features of the applied model of price regulation.

ECRB recognizes that the PECI promoters may be
exposed to additional non-controllable risks that were not observed or
accounted for by the NRA while setting the price controls, and that such risks
may adversely influence both the project promoter’s decision to invest and the
lenders perception of the bankability of the project.

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