The electricity sector in Georgia - Tariffs

The tariffs for power producers in Georgia are set by the independent regulator, GNERC, and based on the following set of principals.

• The full-cost principal applies. Energy and capacity losses in transmission and distribution shall be fully reflected in tariffs.
• There is a one-part or two-part tariff in Georgia. The least-cost generation assets (HPPs) get a one-part tariff while the gas-fired power producers (peaking power) get a set capacity payment as well as a price for each kWh generated.
• For the one-part tariff, the annual revenue requirement is divided by generated electricity.
• The energy cost (kWh cost) is based on the average cost of generating electricity while the capacity cost is based on the fixed costs.
• The tariffs shall provide a reasonable return on invested equity, sufficient to attract financing for the rehabilitation and further development of the sector.
• Tariffs for each customer group should reflect the actual cost of supplying each group.
• The energy regulator GNERC allows a payback period of 7 years on debt or a straight-line depreciation of approximately 15% for new investments.
• GNERC is in the process of preparing a process on how they will factor CDM credits into the return calculations.

The average regulated generation tariff in Georgia is approximately 2.8 US Cent/kWh, although it fluctuates widely between Vardnilli and Enguri HPP at 0.7 Cents to Energy Invest at 6.8 Cent/kWh.

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