RTE: Financing Electricity Transmission Investments in a Regulated Environment

Case Solution

Filip Roodhooft, Samson Yemane Hadush, Leonardo Meeus, Ilan Momber
Ivey Publishing ()

Until 2013, Réseau de Transport d’Électricité (RTE), a French transmission systems operator (TSO), was the largest TSO on the European electricity grid. Like all European TSOs, RTE was subject to regulatory regimes. At the end of 2013, RTE was operating with an income cap that required regulatory approval before investing. The company was set to launch an ambitious investment program in 2014 to replace aging assets. However, potential regulatory changes, required regulatory approval, and long asset depreciation period made planning difficult. RTE needed to develop a financial planning model that would help decide whether to invest and how to prepare for potential regulatory uncertainties.

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