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Understand regulated revenue
A simplified building-block model combines return on capital, depreciation, operating expenditure and tax allowances, with adjustments and incentives. Revenue is not the same as profit or a customer's tariff. Connection services may have separate commercial treatment.
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Working relationship
Illustrative revenue = return + depreciation + opex + tax ± adjustments
What to keep separate
Do not apply an allowed return to accounting asset value without checking the regulatory methodology.
Your task
Bridge a revenue allowance to network tariffs and explain why different customers pay different amounts.
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Key terms in plain English
- Current
- Flow of electric charge, measured in amperes. In the circuit context it is different from the amount of energy used over a period.