2. Regulatory principles

Volume- and tariff-related timing differences (surpluses and deficits)

According to Article 14 of the Electricity Supply Act (ESA) and the Winter Reserve Ordinance (WResO), grid usage costs must be allocated to users on a user-pays basis. The tariffs for a financial year are determined based on planned costs. Due to price and volume deviations, actual expenses and income vary from the tariff calculation on both the revenue and procurement side. This results in surpluses or deficits, i.e. the tariff revenues from a financial year are higher or lower than the actual expenses incurred during the same period. These volume- and tariff-related timing differences are transferred to the balance sheet and taken into account in cost and revenue calculations for future tariff periods. The expected reduction in volume- and tariff-related timing differences within twelve months of the balance sheet date is recognised as short-term surpluses or deficits in the balance sheet.

EBIT from the core business

Earnings before interest and taxes (EBIT) from the core business are defined in Article 15 of the Electricity Supply Act (ESA) for chargeable costs, and are also defined in Article 18a of the Electricity Supply Ordinance (ESO) for interest on volume- and tariff-related timing differences arising since the 2024 financial year. EBIT corresponds to the interest on invested operating assets (IOA) at the weighted average cost of capital rate for the current reporting year (= WACC_t+0), the interest on the volume- and tariff-related timing differences arising from the 2024 financial year onwards at the borrowing cost rate_t+2 included in WACC_t+2 and taxes. Invested operating assets consist of net current assets calculated on a monthly basis, as well as the property, plant and equipment and intangible assets as at the end of the financial year. In accordance with ElCom directive 03/2024, volume- and tariff-related timing differences up to and including the end of the 2023 financial year remain subject to interest at WACC_t+2 until they have been fully eliminated, which also has an impact on EBIT.

Net proceeds from congestion management

On the basis of a statutory mandate, Swissgrid coordinates the auctioning of bottleneck capacities for cross-border supplies and maintains the related accounting records and bank accounts on a fiduciary basis. The net proceeds from congestion management, referred to as income from auctions, are paid to Swissgrid in accordance with ElCom’s instructions and are used to reduce the chargeable costs of the transmission system and/or to maintain or expand the transmission system, as decided by ElCom.

Tasks assigned to Swissgrid by the federal government (intermediary transactions)

Power reserve

The power reserve includes the measures defined in the WResO to increase security of supply and comprises orders for the use of hydropower reserves, reserve power plants, pooled emergency power groups and combined heat and power plants (CHP plants). In accordance with the ordinance, the costs of these measures must be billed via Swissgrid. Swissgrid has no control over the structure of the key performance parameters and acts solely as an intermediary. In accordance with the accounting regulations, these activities are treated as intermediary transactions, which is why only the value of the services provided by Swissgrid itself and the associated net turnover are reported in the income statement and in the power reserve segment reporting. Information on net turnover and procurement costs for the power reserve is given in Note 7.

Since the 2024 financial year, the chargeable costs for the power reserve have been calculated in the same way as for the core business in accordance with Article 15 ESA. However, interest on the assets required for the power reserve is calculated according to the borrowing cost rate_t+0 included in WACC_t+0. In accordance with Article 18a ESO, interest on the volume- and tariff-related timing differences arising since 1 January 2024 is calculated at the borrowing cost rate_t+2 included in WACC_t+2. No interest is applied to the volume- and tariff-related timing differences up to and including the end of the 2023 financial year until they have been fully eliminated. EBIT in accordance with the WResO is calculated based on the interest on the assets required for the power reserve, the volume- and tariff-related timing differences arising since 1 January 2024, and taxes.

Solidarised costs

The solidarised costs include the costs for grid enhancements governed by the revised Electricity Supply Act (in force since 1 January 2025) as well as the temporary state aid for Swiss iron, steel and aluminium producers of strategic importance. The costs for these measures must be billed via Swissgrid in accordance with legal requirements. Swissgrid has no control over the structure of the key performance parameters and acts solely as an intermediary. In accordance with the accounting regulations, these activities are intermediary transactions, which is why only the value of the services provided by Swissgrid itself and the associated net turnover are reported in the income statement and in the solidarised costs segment reporting. Information on net turnover and procurement costs for the solidarised costs is given in Note 7.

EBIT for the solidarised costs is calculated based on the interest on the assets required for grid enhancements, the volume- and tariff-related timing differences and taxes. The assets required for grid enhancements and the volume- and tariff-related timing differences are calculated in the same way as for the core business, at the weighted average cost of capital rate for the current reporting year (= WACC_t+0) or the borrowing cost rate_t+2 included in WACC_t+2 . In the reporting year, however, interest was recognised only for costs in accordance with Article 15b para. 3 ESA (grid enhancements connected to the medium-voltage grid and above), as only these costs were incurred in the reporting year.

Imputed capital cost rate (WACC)

The imputed capital cost rate (WACC) for the capital tied up in the grid is defined annually by the Federal Department of the Environment, Transport, Energy and Communications (DETEC). The relevant capital cost rates for the 2025 financial year (WACC_t+0 and WACC_t+2) are structured as follows: