RP5 Revenue Cap Methodology (2028–2031)

The detailed methodology Ei uses to calculate Swedish DSO revenue caps (intäktsramar) under förhandsreglering — how capital assets are valued, how flexibility service costs are classified, how the utilization incentive works, and the incoming RP5 (2028–2031) TOTEX benchmarking reform that replaces most of it. Split out from Ei as a dedicated technical reference (2026-07-07 structural review) — see Ei › Revenue cap regulation for Ei’s institutional role summary and Swedish DSO Tariff Reform — Three Parallel Tracks (2025–2027) for how this reform fits alongside the effektavgift redesign and förhandsprövning tracks.

Ei implements förhandsreglering (advance regulation) through four-year tillsynsperioder (supervisory periods). DSOs submit financial and technical data via Ei’s KENT IT system (accepts XML or EIFS-specified Excel upload); for the RP5 (2028–2031) round, reporting moves to Ei’s new e-service Neon, opening 1 March 2027 (see the timetable section below). The legal basis for RP4 (2024–2027) data reporting is EIFS 2023:4 (rapporteringsföreskriften) and EIFS 2023:5 (beräkningsföreskriften). (Source - Ei Handbok Intäktsram 2024-2027 (2023), Source - EIFS 2023-4 och 2023-5 Rapporterings och Beräkningsföreskrifter (2023))

Capital base valuation — normvärdering

The default method for valuing DSO grid assets in the capital base is normvärdering — each asset category is multiplied by a unit replacement cost (normvärde) from Ei’s normvärdeslista. The current list (RP4) was developed by Sweco in 2022 and covers eight categories: high-voltage cables, substations, control/communication equipment, relay protection, urban local grid (≤24 kV), rural local grid (≤24 kV), regional grid overhead lines (≥36 kV), and meters. Sweco’s proposed normvärden were indexed from a 2018 base to 2021 prices (+10.42% via byggkostnadsindex); reaching the final 2022 price target was left as a separate recommendation, since 2022 was not yet complete at the time of the report and was flagged as an exceptional cost environment (war in Ukraine, component shortages, energy price shock) that made indexation complex. (Source - Konsultrapport Normvärdeslista 2024-2027 Sweco (2022))

For the customer-facing consequence of this valuation choice — why network fees have risen well above inflation — see Elnätsavgift — What Determines Your Bill.

The current approach is kapacitetsbevarande (replacement cost / forward-looking): assets are valued at what it would cost to acquire them today, not at their historical acquisition cost. For RP5 (2028–2031), Ei has indicated a move to förmögenhetsbevarande (historical cost / backward-looking) valuation — the approach used by the majority of European regulators. This transition would eliminate normvärdering as the primary valuation instrument. DFC Economics, commissioned as an RP5 methodology input, explicitly recommends this move; Montell och Partners’ companion report — a broader methodological survey rather than a recommendations paper — presents förmögenhetsbevarande as viable (both principles can achieve NPV neutrality) without itself taking an explicit position. Ei also intends to switch from a real WACC (with indexed RAV) to a nominal WACC with unindexed historical cost RAV — recommended by DFC Economics (whose own rationale cites majority European practice) and reviewed by Montell och Partners, whose international survey shows WACC type is actually mixed across reviewed countries (Italy and the UK use real WACC; the Netherlands, Austria, and the USA use nominal; France splits by activity). (Source - Konsultrapport Avkastningsmetoder Elnät Montell och Partners (2024), Source - Konsultrapport Return on Investment Elnät DFC Economics (2024))

The enabling legislation is now decided. SOU 2023:64 (October 2023) — the inquiry behind the delegation-to-föreskrifter approach RP5/TOTEX depends on — resulted in Prop. 2025/26:26, submitted 2 October 2025 and driven by EU regulator-independence requirements (the CJEU’s “Tysklandsdomen”, C-718/18). It removes the term kapitalbas from ellagen entirely and delegates all capital-cost calculation detail to Ei’s own föreskrifter — the statutory basis the RP5 methodology work above requires. Ellagen changes take effect 1 January 2027, timed to apply from the first revenue-cap decisions covering RP5 (2028–2031); existing 2024–2027 caps are unaffected. Notably, the government rejected two other SOU 2023:64 recommendations: it did not repeal the särskilt investeringsutrymme law (LOSI) and did not extend general överrullning to two tillsynsperioder — keeping both at their pre-existing scope. (Source - Prop. 2025-26-26 Regelverket för Framtidens El- och Gasnät (2025))

Ei’s first attempt at this transition was blocked by a court ruling. Ahead of the current (2024–2027) period, Ei began requesting DSO data to support a method change but Kammarrätten i Jönköping ruled (20 June 2023, mål nr 1448–1450-23) that Ei lacked authority to request the data in the way it had; the methodology work paused and Ei reverted to essentially the 2020–2023 method (with adjustments, e.g. to kalkylränta) for 2024–2027. Work on förmögenhetsbevarande resumed under the current period, targeting RP5. Even once adopted, the new method is prospective only — it will not revalue already-decided 2024–2027 caps. Konkurrensverket‘s 2026 competition-law review adds the mechanism-level argument for why the current method risks overcompensation: since 2012 construction costs (BKI) have risen almost twice as fast as general inflation (KPI), and capital financing actually competes in a broader capital market that KPI tracks better — so BKI-linked nuanskaffningsvärde may credit DSOs with capital costs exceeding their actual financing costs. Ei’s own kalkylränta for local networks rose from 3.39% to 4.53% between the 2020–2023 and 2024–2027 periods. (Source - Konkurrensverket Analys i Korthet 2026-3 Prisbildningen på Elnätsmarknaden (2026))

Key clarification: the kapacitetsbevarande → förmögenhetsbevarande transition does not address the CAPEX bias favouring grid investment over flexibility. Both methods treat flexibility opex identically — it earns no regulated return. The separate fix is the TOTEX/lösningsneutralitet reform (ellagen 5 kap 12a§).

The EU frames TOTEX as already required, not optional. The Commission’s January 2026 network-charges guidance reads the 2024 amendment to Art. 18 of the Electricity Regulation as obliging tariffs to “consider both capital and operational expenditure”, giving operators short- and long-term incentives including anticipatory investment, so that methodologies “encourage holistic thinking about system needs” and let regulators incentivise flexibility and optimal grid use “rather than a more traditional approach of building out the grid”. That is the CAPEX-bias problem stated as an EU legal requirement rather than a Swedish policy preference — which raises the stakes on RP5 delivering it from 2028, since the obligation predates the Swedish implementation by four years. (Source - C(2026)126 Future Proof Network Charges Guidelines)

Connection fees and the capital base

The problem, in Ei’s own framing: assets whose investment cost is fully or partially covered by a customer-paid anslutningsavgift (connection fee) are nonetheless currently included in the DSO’s capital base — earning the DSO a regulated return on capital it never actually put up. The practical effect is that the connecting customer pays twice: once directly via the connection fee, and again indirectly through everyone’s network tariffs (since the asset’s return is baked into the revenue frame all tariff-payers fund). An additional inconsistency: how much of this happens today varies by DSO accounting practice (immediate revenue recognition vs. periodization), so the size of the double-payment effect isn’t even uniform across companies.

The RP5 fix: from RP5 (2028–2031) onward, Ei intends to deduct connection-fee-funded assets from the revenue frame — using the same discount rate and depreciation periods as the general capital-cost calculation, applied to connection-fee income arising from RP5 onward (fees recognized in RP5 relating to pre-RP5 income are also deducted, but without a retroactive return adjustment for that earlier period). The result: the revenue frame only grows for the share of investment the DSO actually funded itself, not the customer-funded share — and the same rule applies to every DSO regardless of its accounting principles, removing the need for case-by-case periodization applications. (Source - Ei Inriktning intäktsramar 2028-2031 (2025))

This sits directly alongside — and only makes full sense together with — the connection-charge design rules in EIFS 2026:10 (in force 1 Jan 2027, a year before this deduction begins): EIFS 2026:10 governs how much a DSO can charge a customer for a connection; this RP5 mechanism governs what happens to that money in the revenue-cap calculation afterward. See Anslutningsavgift 2027 — What Changes for DSOs and Customers for the combined practical read.

Flexibility service costs (§9.5.8)

Ei’s revenue cap Handbok (§9.5.8) classifies kostnader för flexibilitetstjänster as opåverkbar opex (uncontrollable operating costs), recovered at 1:1 actual cost with no efficiency deduction. The legal basis is ellagen 5 kap 12a§ (Lag 2022:596) and Art. 32 Dir. 2019/944.

Important precision: this 1:1 treatment is a Handbok interpretation, not stated in EIFS 2023:5 itself. EIFS 2023:5 §2 defines opåverkbar costs by exclusion list — and flexibility costs are not in that list. They are technically påverkbara under the formal regulation; the Handbok §9.5.8 overrides this in practice. (Source - EIFS 2023-4 och 2023-5 Rapporterings och Beräkningsföreskrifter (2023))

The product approval gate: EIFS 2023:4 §15(8) requires that flex costs be separately reported only for products with specifications approved under §11 Förordning (2022:585) (repealed from 2027-01-01; the approval step moves to 2 kap. 6–8 § of the elsystemförordning, and 9 kap. 4 § lets Ei set by föreskrift what makes flexibility services count as improving efficiency — Source - Elsystemförordning (2026-1522)). Without prior Ei product approval, a DSO’s flex procurement costs are not separately identifiable — they remain in the general påverkbar cost pool and face efficiency benchmarking. The December 2025 LFM-h/p/e product approval (seven nätföretag) was the first activation of this mechanism. (Source - Ei Godkänner Marknadsprodukter Flexibilitetstjänster (2026), Source - EIFS 2023-4 och 2023-5 Rapporterings och Beräkningsföreskrifter (2023))

Despite favourable cost-recovery treatment, flex costs still earn no regulated return on a capital equivalent — the CAPEX bias remains operative until the RP5 TOTEX reform enters force in 2028. (Source - Ei Handbok Intäktsram 2024-2027 (2023))

Utnyttjningsgrads-incitament and justerad utnyttjningsgrad

One of the three revenue cap incentive components (alongside quality incentive and efficiency requirement) is the belastningsincitament — a reward/penalty based on how evenly a DSO loads its connection to the overlying grid. For RP4 (2024–2027), Ei replaced the earlier medellastfaktorn indicator with utnyttjningsgraden (Ug = Pmedel / Pmax,4: annual average daily load / average of the four highest daily peak loads), decided via PM2023:01. (Source - Ei PM2023-01 Incitament Effektivt Nätutnyttjande (2023))

The switch gives DSOs a stronger incentive to reduce specifically the highest peaks on the worst load days of the year — the hours that actually drive upstream capacity requirements — rather than rewarding uniform profile flatness across all hours equally.

Monetization: the incentive is priced against the DSO’s upstream subscription and connection costs. Ei’s empirical calculations across 21 networks show a typical magnitude of ±1% of intäktsram, equivalent to 40–174 SEK/customer/year per 1 percentage point for local networks (mean ~75 SEK/customer/year — not median). For a DSO with 100,000 customers, 1% intäktsram ≈ 7.5 MSEK/year. This creates an additional financial incentive to procure peak-shaving flexibility beyond the direct cost pass-through channel. (Source - Ei PM2023-01 Incitament Effektivt Nätutnyttjande (2023))

The renewable distortion and correction: new renewable production connections (wind farms, solar parks) mechanically lower Pmedel without affecting Pmax,4 (peak loads occur on cold, still, dark winter days when renewables produce little), worsening a DSO’s Ug score without reflecting poor load management. Ei allows a justerad utnyttjningsgrad (Ugjusterad) that additionally includes in the calculation the pure-production connection points commissioned from 1 January 2022 onward (the source’s own worked example shows this can raise or lower the hourly figure depending on the hour). Reporting deadline: 31 March 2028 (covering all four RP4 years simultaneously). Eligible points must be exclusively production facilities (consuming only to run the plant); mixed-use points (residential solar, farms with combined load/generation) do not qualify. The adjusted figure is optional and, if submitted, replaces the regular figure only for the outcome; the norm is always based on the regular utnyttjningsgrad. (Source - Ei Justerad Utnyttjningsgrad (2024), Source - Ei PM2023-01 Incitament Effektivt Nätutnyttjande (2023))

RP5 TOTEX benchmarking model (announced May 2026)

Announced 2026-05-29 (Source - Ei Benchmarkingmodell RP5 (2026)). Ei will use DEA (Data Envelopment Analysis) — the same framework as the current regulation — with four structural changes for the TOTEX era:

1. All costs included except myndighetsavgifter: subscription costs to overlying/adjacent networks and network loss costs join capital and operating costs in a single benchmarking variable. Regulatory fees (myndighetsavgifter) are excluded — they are neither controllable nor substitutable.

2. Elområde price correction: subscription and loss costs are normalized to a common electricity price in the DEA model. SE1–SE4 price differences are outside DSO control; without correction they would create systematic cross-area cost disparities. Key principle: the normalization applies only in benchmarking; the efficiency incentive (in SEK) is applied to the DSO’s actual unreduced costs — preserving real financial incentives while enabling fair comparison.

3. Förläggningsmiljö installation environment correction: schablonized percentage deductions per soil cable type adjust underground cable acquisition values toward a “landsbygd normal” baseline. Urban and technically difficult terrain drive structurally higher capex that DSOs cannot influence. Same two-step logic: adjusted in benchmarking, incentive on actual acquisition values.

4. Ledningslängd added as structural factor: line length supplements number of substations (already in current model) as a structural control for customer density. More representative for sparse rural networks where line length matters more than substation count.

Production variable supplement: delivered energy at gränspunkter (connection points to overlying grid) is added to existing output variable (delivered energy to end customers at HV) — filling an identified gap in the current model.

This announcement resolves the previously open question (under investigation spring 2026) of how Ei would adjust the benchmark for structurally heterogeneous DSO conditions. Still open: maximum cap on incentive revenue impact; final beta parameter and peer selection for kalkylräntan.

The DEA benchmarking above applies to lokalnätsföretag. Regionnätsföretag get a different efficiency-incentive method — see below.

RP5 efficiency incentive for regionnät — MTFP (announced June 2026)

Announced 2026-06-24 (Source - Ei Effektiviseringsincitament Regionnät MTFP (2026)). For regionnätsföretag, Ei will not use relative DEA benchmarking but a productivity measure — multifaktorproduktivitet (MTFP / multifactor productivity) — replacing the current generellt krav (general efficiency requirement) on historical påverkbara (controllable) opex, from RP5 (2028–2031).

• Why different from lokalnät: the aim is the same — enable TOTEX — but regionnätsföretag are far fewer (≈5 companies), so relative peer benchmarking is statistically unreliable. MTFP instead measures each firm’s individual productivity development over time (own output-to-input trend), which compares a small number of firms robustly even under different structural conditions.
• TOTEX-enabling: like the lokalnät model, MTFP relates total costs (opex + capex) to delivered output, so the incentive is lösningsneutral between investment and running-cost measures.
• Replaces the normvärdeslista incentive: removing the norm-value list weakens the direct capex-efficiency signal; basing the incentive on productivity development of total costs preserves it and keeps regionnät regulation consistent with lokalnät.
• Confirms the Termicum recommendation: this adopts the MTFP approach the Termicum (2025) report proposed for regionnät/Svk; methodology basis is the consultant report “Kostnadsreducerande incitament för region- och transmissionsnät” (2026-01-30).
• Still open: data choice, model design, and how productivity development translates into individual efficiency incentives — under development ahead of RP5.

The two RP5 efficiency-incentive tracks are therefore: lokalnät → DEA benchmarking (May 2026); regionnät → MTFP individual productivity (June 2026). Svk (transmission, single entity) falls under the same small-N logic as regionnät.

RP5 timetable, reporting and controllable-cost reimbursement (announced September 2026)

Announced 2026-09-16 (Source - Ei Tidplan Ny Elnätsreglering 2028-2031 (2026)):

• Early November 2026: Ei publishes the preliminary RP5 method with a konsekvensutredning, open to input from DSOs and other actors; a proposal for new föreskrifter on reporting and revenue-cap calculation goes on remiss at the same time.
• 1 March 2027: föreskrifter preliminarily enter into force (decided about a month earlier), and the DSO reporting e-service opens — now Neon instead of KENT, with a handbook published on opening. The reported data underpins Ei’s 2028–2031 revenue-cap decisions.
• Controllable costs (påverkbara kostnader): today reimbursed against a historical reference period (2018–2021 for the current period). For 2028–2031 Ei proposes reimbursement based on actual costs during the supervisory period, so that necessary cost increases are not delayed. Because no 2022–2025 reference period will be used, unusually large single-year costs might otherwise go unreimbursed — DSOs can claim compensation for such costs in the March 2027 reporting. The change explicitly covers controllable costs including those converted from capital costs into controllable costs.

This gives the RP5 process concrete dates; the method’s content (beyond the elements announced in May and June 2026 above) is still to come in November.

RP5 methodology consultant inputs

Ei commissioned three analytical reports as input to the RP5 (2028–2031) methodology design:

The Termicum report also provides the formal economic grounding for the CAPEX bias: the Averch-Johnson effect — under capital-return regulation, monopolists systematically overinvest in capital because allowed return is tied to the asset base.

International reference points for RP5 (Energiforsk 2026:1175)

Energiforsk’s omvärldsanalys om intäktsreglering (Source - Energiforsk 2026-1175 Kapacitet för Tillväxt Intäktsreglering (2026)) benchmarks three regimes against Sweden’s RP5/TOTEX direction:

• Netherlands — TOTEX since 2001; from 2027 shifting benchmark → actual costs with ex-ante assessment + full ex-post truing-up (lower investment risk); flexibility treated as a first-hand measure requiring CAPEX/OPEX neutrality; nominal pre-tax WACC 5.40–5.80%.
• United Kingdom — output-based TOTEX since 2013 (RIIO); RIIO-ET3 (2026–31) decided Dec 2025, RIIO-ED3 (2028–33) proposed. Flexibility is rewarded on par with investment via “slow money” (a fixed capitalisation share of OPEX added to the RAB and depreciated like capex), plus two explicit instruments — the Flexibility Commitment Index (FCI) (rewards deferring/replacing reinforcement with flexibility) and Use-or-Explain (justify every reinforcement against a flexibility alternative). Real WACC 4.5–4.7%. These are the clearest existing examples of regulation that actively rewards choosing flexibility over reinforcement — directly relevant to whether Sweden’s TOTEX neutrality alone is enough.
• Spain — centralised, nationally harmonised tariffs not cost-linked; steered via binding NDPs and detailed rules rather than economic incentives; moving toward output/TOTEX neutrality; mandatory flexibility services from 2026.

See Grid Capacity Utilization › The revenue-regulation dimension for how this connects to capacity-release measures.

Outside view — remuneration design and flexibility (ISGAN and Comillas, 2026)

A joint ISGAN and BRIDGE discussion paper (ISGAN and BRIDGE discussion paper, April 2026) and the Comillas roadmap it applies (Comillas regulatory roadmap) argue that a DSO’s remuneration scheme decides whether it prefers CAPEX or flexibility (mostly OPEX). Cost-of-service and hybrid schemes give a strong CAPEX bias; the recommended base is an ex-ante revenue cap with ex-post profit-sharing (an incentive rate of at least 50% removes much of the bias), followed by decoupling revenue from the company’s investment plans and adaptable planning. In a survey of 11 jurisdictions, 6 had not yet included flexibility in remuneration and 7 used cost-of-service or hybrid schemes.

The paper also warns that TOTEX with a fixed capitalisation rate (a fixed share of OPEX earning a regulated return, as in the UK’s “slow money” above) introduces an OPEX bias. That is a different construct from the TOTEX efficiency benchmark Ei describes above; the vault’s sources do not say whether RP5 also applies a fixed capitalisation share to flexibility costs, which under the Handbok earn no return, so the finding is not shown to apply to Ei’s method. The paper is a discussion paper and its quantitative claims rest on Comillas work not held in full here.

Dir. 2026:83 — a further revenue-cap inquiry (decided July 2026)

Even before RP5 methodology work concludes, the government opened a second, adjacent inquiry into revenue-cap regulation: kommittédirektiv 2026:83 (decided 23 July 2026, reporting deadline 24 November 2027). It revisits territory SOU 2023:64 raised but Prop. 2025/26:26 (above) left unresolved or explicitly rejected, plus two new questions:

• Avkastning (return on investment) — whether Ei’s single kalkylränta per period should become more flexible, better matched to a DSO’s actual mix of equity vs. debt financing, rather than risking under- or over-compensation under one generic rate.
• Överklagande (appeal rules) — today only DSOs can meaningfully appeal revenue-cap decisions (courts have found customers likely lack standing), and appeals are decided line-item by line-item rather than on whether the resulting aggregate cap is reasonable — a one-sided ratchet the directive wants rebalanced toward the customer perspective.
• Överrullning (rollover of shortfalls) — the directive asks whether överrullning should be restricted, and whether more frequent in-period reconciliations should be introduced. This is the same mechanism SOU 2023:64 proposed extending to two tillsynsperioder and Prop. 2025/26:26 declined to touch (see överrullning) — Dir. 2026:83 approaches it from the opposite direction.
• Tak för höjningar (cap on fee increases) — new ground: since revenue-cap detail now sits with Ei rather than legislation, neither the Riksdag nor the government can directly constrain how large an increase Ei’s methodology produces in a given period. The directive cites Finland’s 8%/year cap on elnätsavgift increases as a reference model.

None of this changes RP5 (2028–2031) methodology directly — the reporting deadline (November 2027) falls after RP5’s first revenue-cap decisions would already be in motion — but it signals the return-on-investment and cap-increase questions raised by Konkurrensverket’s overcompensation critique (above) and by rapid tariff growth are now formally on the government’s agenda, not just industry/regulator discourse.

Relationship to other wiki pages

• Ei — the regulator; this page is the detailed methodology reference split out from Ei’s own entity page
• Swedish DSO Tariff Reform — Three Parallel Tracks (2025–2027) — Track 1 (TOTEX/CAPEX bias) narrative and how it interacts with the effektavgift redesign and förhandsprövning tracks
• Konkurrensverket — competition-law scrutiny of the capital-valuation mechanism
• Flexibility — the general CAPEX bias concept
• Grid Capacity Utilization — how the revenue-regulation dimension connects to capacity-release measures

Data gaps

• Maximum cap on the efficiency incentive’s revenue frame impact — not yet determined; under investigation spring 2026; candidate source: ei.se intäktsramar project page
• Beta parameter and peer company selection criteria for kalkylräntan — methodology consultation published but final choices pending; the preliminary method is due early November 2026
• Full text of Ei’s föreskrifter implementing the new delegated intäktsram-calculation authority from Prop. 2025/26:26 — not yet published