Definition
The revenue cap (inntektsramme) is the regulatory ceiling NVENorway's Directorate of Water Resources and Energy - regulates the electricity and water resources sectors. sets for the maximum income a grid operator may collect from its network customers through the grid tariffThe component of electricity customers' bills that covers grid rental - regulated by NVE. in the course of a year. The system was introduced in 1997 and is the cornerstone of NVE's revenue cap regulation of natural monopolies. The revenue cap is calculated on the basis of the grid operator's historical costs, depreciation, WACC (required rate of return), and an efficiency factor (DEA analysis). If a grid operator's actual revenues exceed the revenue cap, the surplus must be repaid to customers - and vice versa. KILEQuality-adjusted Revenue (Kvalitetsjustert inntektsramme) - economic regulation where grid companies are penalised for power outages based on their cost to customers. costs (quality of supply) are deducted from the revenue cap and provide a direct incentive for grid operators to minimise interruptions. The revenue cap is updated annually and is the most important financial management parameter for grid operators.