The Cyprus Energy Regulatory Authority (CERA) on Tuesday unanimously rejected a request from the Independent Power Transmission Operator (IPTO) to begin recovering costs associated with the Cyprus-Crete electricity interconnection project from consumers starting January 1, 2025.
CERA said it would allow cost recovery to begin only when the project commences commercial operation, enabling electricity transfers between the Cypriot and Greek grids.
The decision cited the “high additional return (WACC premium)” already granted under the TEN-E regulation as a project incentive, along with a “significant increase in the capital cost intensity” outlined in a recent amendment to the Cross-Border Cost Allocation Agreement.
“Therefore,” the decision stated, “it is not considered reasonable for the Implementing Entity to receive the regulatory incentive regarding the recognition of reasonable return and revenue and recovery during the construction period. Any expenses related to this period will not be recognised and/or recovered in any way before the commencement of the project’s commercial operation.”
In a separate decision, CERA confirmed a four-year regulatory control period, starting from commercial operation, and maintained Decision No. 22/2023 regarding the methodology for adjusting allowed revenues and tariffs.
CERA said it would communicate the decisions to IPTO, the Cyprus Transmission System Operator (TSOC), and the European Commission, and publish them on its website.
