Tariff Calculation and Regulatory Application for a petroleum product import terminal
Our client was in the process of constructing a petroleum products loading and storage facility for imports to the Western Cape and required an approved tariff as condition of their operating licence. The tariff needed to allow the facility to compete with product imported by road and thus had to be carefully crafted with appropriate starting level and escalation.
After lengthy engagement with the regulator regarding methodology we calculated an appropriate tariff path that would meet both the client’s needs and the regulator’s requirements. This required the calculation of a levelised cost tariff that increases by inflation every year, and the calculation of a Rate-of-Return tariff for the same facility and the demonstration of parity between these two different tariff profiles. We also documented the financial calculations (model) and drafted the technical (and primary) sections of the tariff application document. Following the submission of the application, we remain active on the project to assist Sunrise with the finalisation of the NERSA tariff approval process.
Expertise: Advanced Financial Modelling, Analysis of Legal regulatory Frameworks, Build Customer-facing spreadsheet tools, Preparing Regulatory Tariff Applications, Pricing Mechanism Development, Pricing Strategy, Project Risk Assessment, Project Valuation, Regulatory Economics, Regulatory Engagement, Tariff Application Strategy