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methodology for the calculation of discounted net revenues. Expert Group Meeting, 26 September 2013. Empowerment. Article 54 (3) (b) of the CPR provides for the following empowerment.
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methodology for the calculation of discounted net revenues Expert Group Meeting, 26 September 2013
Empowerment • Article 54 (3) (b) of the CPR provides for the following empowerment. • “The Commission shall be empowered to adopt delegated acts, in accordance with Article 142 laying down the method referred to in point (b)" • Delegated Act for the Methodology for Discounted Net Revenues • Implementing Act for the CBA methodology • DA linked to IA by provisions related to Financial Analysis
Content of the Delegated Act • Article 54 (3) (b) of the CPR refers to: • /…/"Calculation of discounted net revenue of the operation, • taking into account the reference period appropriate to the sector or subsector applicable to the operation, • the profitability normally expected of the category of investment concerned, • application of the polluter-pays principle • and, if appropriate, considerations of equity linked to the relative prosperity of the Member State or region concerned'.
Calculation of Discounted net revenue to determine the Funding gap • The following formula shows the calculation of funding gap and the funding gap rate: DEE = DIC – DNR = FG • FGR = (DIC-DNR) / DIC = 1- DNR/DIC • In order to establish the decisional amount and the Union contribution, the following standard calculation shall be used: • DA = EC * (1-DNR/DIC)= EC*FGR • where DA stands for decisional amount • EC is the eligible cost • EU grant = DA * maxCFpa • maxCFpa stands for maximum co-financing rate of the priority axis or measure(%)
Revenues, Costs and residual Value • Incremental methode • Onlyrevenues and costsattributable to the operation 'Additional' contributions – not only new revenues • Recalculationonly for new sources of revenues , Art. 54 (b) • Investmentcosts = eligible and ineligible capital costs for construction • Operating and maintenance costsfixed and variable (linked to consumption) • Replacement costs to assure technicalfunctioning of the operationduring the referenceperiod • Residual value- net present value of cash flow in the remaining life years • Residual value to beconsidered if DNR >0
Reference to principles • Polluter pays principle • Pollution costs and costs of preventive measures are borne by those who cause the costs • Full cost recovery • Tariff aims in recovery of capital+ operational + maintenance/replacement costs with regard to reference period • 'Affordability' and 'Proportionality ' to be respected
Reference periods • Derogations must be justified • Different periods for sectors not covered by Annex 1 possible
Changes in comparison to the Financial Analysis presented in June • Financial discount rate (originally proposed: 5%, now 4%) • Calculation of Residual value (originally proposed: 'calculated as a cash-inflow in the last year of the reference period as the residual (non-depreciated) accounting value', now 'by computing the net present value of cash flows in the remaining life-years of the project') • One definition of replacement costs (previously we also had 're-investment costs' category)