Regulatory methods
Validation decisions and regulatory methods 2024–2031
The Energy Authority monitors the pricing of network operators as a whole in periods of four years. The Energy Authority has confirmed to the electricity and natural gas operators the methods on the basis of which the monitoring will be carried out for the next eight years. The monitoring is based on electricity and natural gas market legislation, regulatory methods to guarantee reasonable pricing confirmed by the Energy Authority on the basis of electricity and natural gas market legislation, and legal praxis.
The monitoring methods confirmed by the Energy Authority are network operation specific as follows:
Electricity distribution and high-voltage network operations: Regulation methods in the sixth regulatory period 2024-2031
Explanatory memorandum confirmation decisions regulation methods in the sixth regulatory period
Publication of Information on the Methodology for Determining Regulated Revenue of the Natural Gas TSO in Accordance with Regulation (EU) 2024/1789
Natural Gas Transmission System Operator (TSO): Gasgrid Finland Oy
Tariff Period: 2024 for the financial data provided (regulatory period 2024-2027, methodology period 2024-2031)
Date of First Publication: August 1, 2025
Last update: August 1, 2025
This page details the methodology used to determine the regulated revenues for the natural gas network TSO Gasgrid Finland Oy for the ongoing tariff period, in accordance with EU regulations (Regulation (EU) 2024/1789). Where the TSO is part of a larger entity, the information is provided separately for the transmission activities.
Finnish Energy Authority (Energiavirasto) is responsible for the calculation, setting and final approval concerning the different components of the regulatory methodology used to set the regulated revenue of the transmission system operator.
2a. General Methodology
- Type of Methodology: Hybrid model of rate-of-return methodology with incentives-based regulation. Any under or over recovery of allowed revenue is carried forward to the next regulatory period.
- The detailed description of the methodology for 2024-2031 is available here.
2b. Regulated Asset Base (RAB) Calculation
- i. Initial Asset Valuation: Assets invested before 2024 were initially valued at the unit prices in place at the time of investment and revalued until 2024. No further revaluations. Assets invested after 2024 are initially valued with year-specific unit prices and then frozen after the regulatory period with more accurate year-specific unit prices determined from investments done during the regulatory period. Investments under construction are allowed regulatory return (but no regulatory depreciation) and fully commissioned investments are allowed both regulatory return and depreciation fully from the completion year onwards (not only from the following year onwards). See Section 2 of the methodology document for further information.
- ii. Asset Revaluation: No further revaluations (nominal WACC is used).
- iii. Asset Value Evolution: N/A
- iv. Treatment of Decommissioned Assets: Decommissioned assets are removed from the asset base.
- v. Depreciation Methodology: Straight-line depreciation based on the selected depreciation period by the system operator. Assets in use after the depreciation period are allowed depreciation if the asset stays in use.
2c. Cost of Capital Determination
- See Section 3 of the methodology document concerning the Weighted Average Cost of Capital (WACC).
- The latest confirmed WACC-parameters can be found here.
2d. Expenditure (OPEX and CAPEX) Determination
See Sections 2 and 5 of the methodology document for the methodology determining operational and capital expenditure.
2e. Cost Efficiency Determination
- See Sections 2.1 and 6.1 of the methodology document for CAPEX efficiency determination.
- See Section 6.3 of the methodology document for OPEX efficiency determination.
2f. Inflation Determination
- Nominal risk-free interest rate is used in the calculation of the nominal WACC, which includes an inflation expectation.
- For capital expenditure, consumer price index is used to determine the investment year specific unit prices from the base year of the unit price list. These investment year specific unit prices are then frozen. For investments made before 2024, the 2024 unit price list is used without further re-evaluations which is based on cost data from 2022.
- For efficiency incentive, the consumer price index is used to adjust the incentive for each regulatory year.
- See Section 1.8 of the methodology document for further detail.
2g. Premia and Incentives Determination
- The methodology includes performance-based incentives concerning OPEX and CAPEX efficiency, supply quality and innovation.
- See Sections 2.1 and 6 of the methodology document for more detailed information.
2h. Non-controllable Costs
Controllable costs are listed in Table 6 of Section 5.2 of the methodology document. All other operational costs not included in the table are considered as non-controllable costs and are passed through.
2i. Services Provided within the Company Holding
- N/A.
- Gasgrid Group includes subsidiaries Floating LNG Terminal Finland Oy and Gasgrid Vetyverkot Oy underneath the TSO activity of the parent company Gasgrid Finland Oy.
3a. Cost of Capital Parameters for 2025
- Cost of Equity: 7,20 %
- Cost of Debt: 5,42 %
- Weighted Average Cost of Capital (WACC, pre-tax): 7,61 %
- See here for previous years.
3b. Depreciation Periods for methodology period 2024-2032
- Pipelines: 65 years
- Compressor Stations: 60 years
3c. Changes in Depreciation Periods
No changes between 2023 and 2024.
3d. Efficiency Targets
Required Efficiency Improvement: 0 %
3e. Inflation Indices
Index Used: Consumer Price Index (average between April-September)
CPI (2005 = 100) |
2023 |
2024 |
2025 |
April-September |
144,1 |
145,9 |
TBC |
3f. Premia and Incentives
N/A
4a. Regulated Asset Base (RAB) Breakdown
To be published by the end of 2025
4b. Cost of Capital
Total Cost of Capital: To be published by the end of 2025
4c. Operational Expenditure (OPEX)
Total OPEX: To be published by the end of 2025
4d. Premia and Incentives
- Efficiency incentive: To be published by the end of 2025
- Quality incentive: To be published by the end of 2025
- Innovation incentive: To be published by the end of 2025
- Total: To be published by the end of 2025
- EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): 63,5 M€
- EBIT (Earnings Before Interest and Taxes): 48,3 M€
- Return on Assets I (ROA I = EBITDA / RAB): N/A (To be published by the end of 2025)
- Return on Assets II (ROA II = EBIT / RAB): N/A (To be published by the end of 2025)
- Return on Equity (ROE = Profit / Equity): N/A (To be published by the end of 2025)
- Return on Capital Employed (ROCE): N/A (To be published by the end of 2025)
- Leverage ratios:
- Net Debt* / (Net Debt* + Equity): N/A (To be published by the end of 2025)
- Net Debt* / EBITDA: 0,40
*Net debt is calculated by: interest bearing long- and short-term debt less cash and cash equivalents.
To allow for the replication of the allowed revenue calculation, a simplified tariff model with all parameters and values is available for download here.