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KILE – Regulation of quality of supply – Quality dependent revenue caps (CENS)

KILE – Regulation of quality of supply – Quality dependent revenue caps (CENS)

The Norwegian regulator (NVE) has from 2001 introduced quality dependent revenue caps (the CENS arrangement), a model for incentive based regulation of supply quality.

The network companies’ revenue caps depend on the development of the quality of supply in such a way that the companies will be better off by balancing their internal costs and quality of supply towards a socio-economic optimum. Power cuts and voltage disruptions cost Norwegian end users approximately NOK 1 - 1.5 billion annually.

Chief Scientist