Key principles and assumptions for measuring and reporting on impact
Main principles and assumptions
Impacts that are caused by multiple players in the supply chain are attributed to Alliander on the basis of its gross added value in the supply chain. The gross added value is calculated as revenue less goods and services used in production, valued at purchase price.
Impacts that Alliander realises independently are entirely attributed to Alliander.
For comparison purposes, the attribution value from 2020 is also applied for the 2019 impact.
The financial impacts are viewed from the perspective of cash flows to and from society: cash outflows from Alliander are positive impacts for society; Alliander's cash inflows are negative impacts for society.
The prosperity value of energy transmission is calculated on the basis of the consumer surplus. This is the extra value that customers are in theory prepared to pay on top of the regulated price for a service or product. The consumer surplus is currently the most common method for determining economic value, both for liberalised and regulated markets. The consumer surplus relates to all price elements in the energy value chain, including the taxes and prices for the supply and transmission of energy. The amounts presented as manufactured capital indicate the economic part of the energy value chain that is attributable to Alliander. The impact of Alliander that makes ‘feeding energy’ possible consists primarily of the financial impact of using solar panels (PVs) and enhanced well-being from the use of greener energy. The average impact of gas and power failures for the Netherlands is included in this estimate as the price elasticity is based on the actual demand for energy (including failures). The specific impact of gas and electricity outages for Alliander was calculated for 2018 and extrapolated for 2017. The impact of interruptions in the energy transmission on the well-being of consumers is related to interruptions in the electricity network and in the gas network.
In the adopted economic model, price elasticity assumptions were made. The gas and electricity price elasticity curve is assumed to be linear. This produces a conservative estimate of the consumer surplus, which is visualised in the figure below.
The slope of the curve that has an impact on the consumer surplus was determined on the basis of a study by CE Delft (2012).
In order to avoid double counting, the contribution of energy transmission to the prosperity of business customers consists exclusively of the revenue component, without adding the producer surplus of customers.
Alliander is partly responsible for the CO2 emissions from the quantities of electricity, gas and heat transported through its network. The impact includes the measurement of the CO2 emissions associated with the direct operations and those of the supply chain. Emissions in the supply chain are attributed to Alliander on the basis of gross added value.
Alliander's electricity mix ratio (comprising oil, natural gas, coal, and nuclear power) is assumed to be equal to the national electricity mix.
The social costs of a tonne of CO2-eq are estimated on the basis of a study of the U.S. Inter-Agency Working Group of the EPA (2013). In our opinion, this study is relevant because most of the impacts of climate change will occur in the future. EPA’s advice – which we are following – is for the CO2 price to be increased gradually. This means that the valuation of the damage per ton of CO2 has increased by almost 22% compared with 2019. This value has been converted from the data source into the correct currency and adjusted according to the Dutch inflation rate.
The scope for the Eco-cost materials indicator is based on the four largest network component categories: cables, gas pipes, transformers, and smart meters. The materials included in the analysis are: copper, aluminium, PE, PVC, XLPE, transformer oil, tin-plate, steel and scarce materials in the smart meters, as defined in the raw materials passport.
Only staff in the direct employ of Alliander are included in the calculation of this type of capital.
Well-being effects of having work have not been calculated this year because the employee satisfaction study upon which it is based has not taken place. For more information on this subject, please consult the section on our employees.
It is also assumed that non-work related sickness absence has no connection with the work at Alliander. The calculation of the impacts of work-related sickness absence and accidents of employees (safety) is limited to direct effects. An accident or illness may be the underlying cause of other accidents or illnesses, but this is not measured here.
The reputational value is calculated on the basis of the brand value method. This method has been established for commercial utilities. On the basis of data for European organisations in the top 10 utilities, Alliander’s value is estimated with a correction factor. The number of European utilities in the top 10 varies from year to year. 2019: 7; 2020 5.
For this year, we are assuming that the reputation ratio between Alliander and its peers has remained the same. To do this, we are using a projection of the results from previous years. The difference between the respective impacts in 2019 and 2020 is caused by sector change, as reflected in the brand value method.
The value of data collection for market facilitation is calculated on the basis of practical value. We are assuming here that downloading and opening data has and creates a direct net positive value.
The share of data that is used is less than that which is consulted. A factor is used to calculate it.