Abu Dhabi Department of Energy (DoE) has released the Second Regulatory Control (RC2), establishing the maximum revenue limits that companies operating in the water, electricity, recycled water, and wastewater sector can generate during the period spanning 2023 to 2026.
The controls set specific limits for companies operating in Abu Dhabi’s water, electricity, recycled water, and wastewater sector, restricting them to generating a maximum revenue of AED50 billion from January 2023 to December 2026.
Over the next four years, an estimated investment of AED16.2 billion is projected for the development of the sector's infrastructure.
Controls will apply to Abu Dhabi Distribution Company (ADDC), Al Ain Distribution Company (AADC), Abu Dhabi Transmission & Dispatch Company (TRANSCO), and Abu Dhabi Sustainable Water Solutions Company (ADSWSC), previously known as Abu Dhabi Sewerage Services Company (ADSSC).
His Excellency Eng. Ahmed Mohamed Al Rumaithi, DoE Undersecretary, said: “This achievement was the outcome of a collaborative effort, extensive consultations, and dedicated work involving the Department of Energy, Abu Dhabi National Energy Company (TAQA), and various sector companies.
“The newly implemented procedures reflect the ongoing transformations in Abu Dhabi's regulatory framework, strengthen regulatory frameworks while adhering to the highest transparency standards, and ensure the efficiency of companies operating in the sector. The controls enable companies to effectively carry out their operations and manage their activities with increased efficiency, not to mention reinforcing the companies’ capacity to finance economically and technically viable capital projects in the future.”
The controls outline the maximum allowed revenues and individual allowed profit margins for each company. Agreements on investment levels are also made to achieve the desired goals while maintaining the predetermined and essential cost levels for business operations.
DoE, as the regulatory authority in charge of regulating the sector, plays a critical role in ensuring the success of price controls, while carefully striking a balance between the needs of customers, investors, the government, and companies operating in the sector.
The main objectives of the newly implemented controls are to protect customer interests by ensuring security of supplies, accommodating the ongoing growth of the sector, providing top-of-the-line services, and safeguarding investor interests by offering a reasonable return on infrastructure investments, and financially and technically feasible projects.
Moreover, these controls aim to fulfil Abu Dhabi Government’s goals of mitigating carbon emissions, fostering sustainability, facilitating the transformation of the energy sector, improving the regulatory framework for companies, and continuously enhancing performance, while also ensuring companies’ ability to fund their operational and capital endeavours.
The establishment of these regulatory controls through agreements between DoE and the companies operating in the sector is driven by DoE’s commitment to achieving equitable outcomes for both sector companies and customers.
This is achieved through enhancing the efficiency and performance of the grid and opening the door for investments in the development and maintenance of grids through economically and technically viable projects. Any additional costs incurred will be permitted only if deemed necessary, with strict adherence to fulfilling targeted outcomes set for the sector.