Understand your inntektsramme. Improve the performance behind it.
What the report covers
Why you are regulated the way you are, how you perform against the companies the model measures you against, and what-if scenarios for what would improve it.
1
How you perform compared to the rest of the market
Your position
Your DEA efficiency score (trinn 2, rammevilkårskorrigert), your rank among all Norwegian DSOs, your cost norm (K*), and the resulting revenue cap — stated together, in one place. The rank is shown against the full field rather than a selected group, so the number is not flattered by the choice of comparison set.
2
What the gap is worth
The distance between your cost base and your cost norm in monetary terms, through the 0.6 weight the regulator applies — and how that position has developed across regulatory years.What it costs you
The distance between your cost base and your cost norm, converted into monetary terms through the 0.6 weight the regulator applies. This is the figure the rest of the report explains: not a score, but an amount of revenue per year. Everything after this section is about where it comes from and what moves it.
Your trajectory
Efficiency and revenue cap across regulatory years, plotted against the peer median. Because the inntektsramme is set annually and the figures are published each year, the multi-year view is available here. A single year cannot distinguish a company that is closing on the frontier from one the frontier is moving away from — the field improves, and standing still is a decline in relative terms.
3
Who your frontier is drawn from
The model already names your referents. The report explains them — where their cost structure differs from yours, and what that difference is doing to your norm.Your named referents
The specific comparable DSOs the model already identifies as your forbilleder, and how their cost structure differs from yours. The model names them; the report explains them — where their spend sits, on what, and what that implies about the composition of your own. Named companies, not an anonymised peer group.
4
What would move it
Which of your cost movements change the cost norm rather than only your own cost base. The norm rewards delivering the same service for less, so the operational answer and the regulatory one are the same answer.What-if simulation
Scenario modelling against the model itself — a 5 per cent OPEX reduction, or the exclusion of non-comparable peers. Because the cost norm is a frontier result, a change in your spend does not translate one-for-one into a change in the norm. The simulation shows what it does translate into.
Recommendations
Levers ranked by their effect on the cost norm — which is to say by how much they lower the cost of delivering the service you deliver, rather than by the size of the headline cut, which is the ranking ordinary cost analysis produces. Each lever carries its estimated effect on the norm and the monetary value attached to it.
5
How the number was built
What the model runs on, what trinn 2 corrects for, and the model version every result rests on.Why the score is what it is
The distinction the regulation itself draws, applied to your company: what you operate, and what you inherited. Trinn 1 measures the raw result; trinn 2 corrects for the rammevilkår outside your control. The report sets out which of your figures sit on each side of that line, and what the correction is doing to your score — so a cost that is high because of the network you run is not read as a cost that is high because of how you run it. What remains on your side of the line is the operational reading: which parts of running the network cost you more than they cost companies with comparable conditions, and by how much.
How the cost norm is arrived at
Under NVE/RME’s revenue-cap regulation, a distribution operator’s allowed revenue — the inntektsramme — is a weighted combination of its own cost base and a DEA-derived cost norm, the kostnadsnorm K*, with the norm carrying a weight of 60 per cent, and it is set every year. Efficiency is established in two steps: trinn 1 is the raw score, and trinn 2 corrects it for the operating conditions outside the company’s control. The model for lokalnett runs on the number of subscribers, the number of substations, and kilometres of high-voltage network. A methodology revision is under way; the report states the model version every result rests on, and does not claim to simulate a model that is not yet fixed.
None of this is secret. NVE publishes the scores, documents the model, and releases the calculation script itself in R. The data is open and the method is public — that is not the constraint. The constraint is interpretation: a score is the output of a model with a specific set of inputs, outputs and correction factors, evaluated against a specific comparison set, and the number alone says nothing about which of those choices produced it, which companies you were measured against, or which of your cost movements would change the norm rather than only your own cost base.
Because the norm is built from what it costs comparable companies to deliver the same service, the way to move it is operational. The report points at where your own delivery is expensive — which parts of the work, against whom, and by how much — not at how to present the same operation differently. A company that reads it as a regulatory exercise and one that reads it as an operating review end up at the same list.
Answering that means reading the model, not the score — on the same DEA and SFA research base that underpins regulatory benchmarking of this kind across Europe. Professor Peter Bogetoft of Copenhagen Business School has spent his career on these models: their construction, their failure modes, and their use in exactly this regulatory setting.
- Kostnadsnorm (K*)
- The DEA-derived cost norm the regulator sets for your company, given your outputs and operating conditions.
- Inntektsramme
- Your allowed revenue — 60 per cent cost norm, 40 per cent your own cost base, set annually.
- Trinn 2, rammevilkårskorrigert
- The efficiency score after correction for the operating conditions outside your control.
- Referenter
- The specific companies the model uses as your benchmark — your forbilleder.
Understand the model behind your revenue cap
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