According to the Law, ADWEC, as the single buyer of water and electricity capacity and output, is required to charge each distribution company in the Emirate of Abu Dhabi a Bulk Supply Tariff (BST) for any water and electricity supplied to it. This tariff is calculated for each calendar year on a basis prescribed by the Bureau pursuant to the licence granted to ADWEC.
The calculation of the BST requires the estimation of the costs for procuring and despatching water production and electricity generation to meet the forecasted demand. The calculation of the BST has to contend with the additional complexity of allocating fuel costs separately to water and electricity from cogeneration stations and the allocation of costs in general to customers inside and outside the Emirate of Abu Dhabi.
From 2012, the structure of the BST for both water and electricity BSTs has changed and is currently composed of three components (expressed in fils/kWh and AED/TIG for electricity and water respectively) charged on an hourly basis for electricity and water purchased at different times of the day, for ‘Fridays’ and ‘Non-Fridays’ and in different months of the calendar year. These three components are a ‘System Marginal Price (SMP) Charge’ estimated to indicate the short-term marginal costs (excluding back-up fuel (BUF) costs) of providing units at different times of the day; a ‘BUF Levy Charge’ estimated to reflect the additional costs associated with the burning of back-up fuel rather than primary fuel; and a ‘High Peak Period Charge’ assessed to cover the costs associated with the estimated capacity payments and charged only in the peak demand occurring months of June to September inclusive.