Great Sea Interconnector revenue methodology under regulatory review

The Regulatory Authority for Waste, Energy and Water (RAAEEY) has opened a public consultation regarding a proposal by the Independent Power Transmission Operator (ADMIE) to revise the revenue methodology for the Great Sea Interconnector (GSI). This EU Project of Common Interest involves the electrical interconnection between Cyprus (Kofinou) and Greece (Korakia–Crete).

The proposal focuses on revising the current revenue calculation methodology, specifically targeting the gearing ratio used to determine the project’s Weighted Average Cost of Capital (WACC). ADMIE suggests that the gearing ratio should be determined by RAAEEEY before each regulatory period and adjusted annually based on the project's evolving capital structure.

Proposed ranges for the gearing ratio include 50%-60% during the construction phase and 40%-50% during the regulatory depreciation period. The adjustment aims to reflect the actual annual evolution of the project's financial model, accounting for gradual loan disbursements and investment expenditures, while ensuring the operator's financial viability without imposing disproportionate burdens on system users.