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Economic Regulations

Overview

The Abu Dhabi water and electricity sector is structured on a ‘single buyer’ model, in which all production capacity (power or water) is purchased centrally by the Abu Dhabi Water and Electricity Company (ADWEC). Water and electricity are then sold to distribution and supply companies via an annually adjusted bulk supply tariff (BST) for onward sale to the final customers. The two distribution companies (AADC and ADDC) also pay the Abu Dhabi Transmission and Despatch Company (TRANSCO) the transmission use of system (TUoS) tariffs for using its transmission system to transport water and electricity from the production plants to the distribution systems.

The Abu Dhabi Sewerage Services Company (ADSSC) collects, treats, and disposes of the wastewater received from the customers.

Except for the sale of water and electricity to the final customers, all transactions in the water and electricity sector are carried out on an economic basis reflecting the true costs and do not involve any subsidies.

The single buyer, transmission, distribution, supply, and wastewater network companies are monopolies in their service or business areas, so they are regulated economically via price control reviews.

The DoE approves, on an annual basis, a bulk supply tariff and a transmission use of system (TUoS) tariff being imposed to ensure that ADWEC and TRANSCO receive certain returns via the applied price control system. As for AADC, ADDC, and ADSSC, any revenue deficiency shall be determined via the applied price control system, which is the difference between customers’ tariffs and the government subsidy.

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