What is TOTEX approach?
The TOTEX (Capital Expenditure + Operational Expenditure) approach looks at the total cost of expenditure, over the long-term operating life of the plant. Investing a dollar more during CAPEX may deliver tenfold benefits during the plant life.
What is Totex outperformance?
Totex underspending and incentive outperformance increase companies’ return, while overspending and penalties resulting from incentive underperformance decrease their return.
What capex means?
Capital expenditures
Capital expenditures (CapEx) are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. This type of financial outlay is made by companies to increase the scope of their operations or add some economic benefit to the operation.
What is national smart grid mission?
National Smart Grid Mission (NSGM) was established in the Indian Power sector to plan and monitor the implementation of policies and programmes related to Smart Grid activities in India. Regulators, Electrical manufactures, Central Electricity Authority etc.) for Smart Grid are associated with MoP.
What is Totex incentive mechanism?
The sharing factor (1- incentive rate) is applied to the under or overspend on our totex allowance, and our actual totex is recalculated based on this. It is a symmetrical mechanism, meaning that the consumer will bear the same amount of overspend as it keeps underspend, in RIIO-T1, this is 50% both ways for SPT.
What is outperformance wedge?
Put simply, the greater the outperformance, the greater the likely future size of the wedge (and consequent deduction from the cost of equity). The wedge therefore operates similarly to the well-known “ratchet effect” that was applied in UK price control reviews across many regulated businesses in the 1990s and 2000s.
Are assets Fixed?
Fixed assets are long-term assets that a company has purchased and is using for the production of its goods and services. Fixed assets include property, plant, and equipment (PP&E) and are recorded on the balance sheet. Fixed assets are also referred to as tangible assets, meaning they’re physical assets.
How does CapEx affect the three statements?
To reiterate: a CAPEX does not directly affect income statements in the year of a purchase, but for each subsequent year for the expected useful life of the asset, the depreciation expense affects the income statement.
What are Totex allowances?
Under a Totex approach, the setting of totex allowances would replace the current assessment and establishment of separate allowances for capital (capex) and operating expenditure (opex) for regulated energy networks subject to the National Electricity and Gas Laws and Rules.
What is the Totex approach in water and wastewater utilities?
A key driver enforcing a TOTEX approach in water and wastewater utilities is the lack of complete and accurate engineering information captured during capital expenditure (CAPEX) that serves as feed for the operational expenditure (OPEX) cycle.
What is Totex and why should engineers care?
“Totex is the big prize – ultimately engineers want to have a stake in improve infrastructure outcomes,” said Greg Bentley, speaking to Infrastructure Intelligence last month about the value to this new whole life approach to asset management.
What is a total expenditure (Totex) approach?
E ngineering firms and owner-operators in water and wastewater utilities are constantly looking for better ways to reduce the total cost of infrastructure projects. To meet this end, many are taking a total expenditure (TOTEX) approach to managing and operating their water and wastewater infrastructure assets.