Abstract
Approaches to costing are one of the most controversial issues among modern domestic and foreign scholars. This issue is particularly relevant in the context of Ukraine's post-war recovery. The purpose of the article is to study approaches to costing of electricity distribution system operators in the context of post-war reconstruction of Ukraine. The paper considers approaches to costing in electricity distribution system operators. Attention is focused on the sectoral pec uliarities of costing depending on the types of economic activity. It is established that the grouping of costs by items of distribution system operators is carried out with a view to forming tariffs for electricity distribution services. The research highlights the disadvantages of the cost-plus tariff setting system, which include the lack of incentives to invest in the modernisation of distribution networks beyond the approved investment programmes, the interest in increasing costs rather than efficiency, and the reduction of tariffs by regulators in case of efficiency gains. The essence of formation of the electricity distribution tariff by the RAB-regulation method is determined. Considerable attention is paid to the benefits of incentive-based regulation, which include the interest of DSOs in attracting investments in the development of distribution networks, ensuring consistency in pricing policy, the ability to forecast tariffs during the regulatory period, improving the quality of services, reducing inefficient costs, and transparent formation of permitted profits from licensing activities. When implementing incentive-based regulation, it is crucial to determine the real value of the DSO's assets used in regulated activities and the rate of return on the old and new asset base. A higher rate of return on the "new" asset base will be more relevant for finding sources of investment in the context of Ukraine's post-war recovery. The article analyses the composition of controlled and uncontrolled expenses for the formation of the regulated tariff. The paper proposes to accelerate the transition to incentive-based tariff regulation in the context of post-war reconstruction of Ukraine. In the context of post-war reconstruction of Ukraine, the DSOs need to accelerate the transition to incentive-based tariff regulation. This will allow attracting investments in the modernisation and expansion of engineering infrastructure on the basis of return on investment and return on investment, as well as receiving an additional percentage in the tariff for further modernisation of the power grids.
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