Management of the Hungarian Energy Office - Magyar Energia Hivatal

hungarian energy office
(Table 4). The remaining purchases of universal service
suppliers were primarily covered by co-generated electricity
or electricity produced from renewable energy sources by
small power plants sold to MAVIR at administrative prices
and allocated on the affected suppliers.
The purchases of free market traders were not constrained
by law contrary to those of public utility suppliers; therefore
the structure of free market, which is much smaller than the
public utility segment and the dominance of MVM prevailed
purely to a limited extent, was much more heterogeneous.
However, MVM rapidly increased its free market sales in
2008 paralel to the increasing free market consumption, so its
role in supplying the traders who supply eligible customers
was continuously increasing. In 2009, the primary purchases
of traders (excluding trade between traders) essentially came
from four sources (Table 5). These are the import sources,
the electricity sales from power plant (and import) capacities
contracted by MVM, spare capacities of domestic power plants
MVM Trade
(former public utility wholesaler)
2.
Universal service
suppliers
3.
1.
Producers and import
9/b.
Customers entitled for
universal service
7/b. 7
not contracted by MVM and since 2008, the sales of energy
fed in by MAVIR in the framework of feed-in obligation. The
majority of the electricity purchased from primary sources (a
signifi cant part of which passes several traders) was sold on
the Hungarian retail market, and only a smaller proportion
was sold abroad.
In Hungary, there is an organized energy market (energy
exchange) but did not work in 2009; therefore electricity
trade was fundamentally conducted within the framework of
bilateral contracts. Electricity sales are illustrated on Figure 1
(transactions in relation with ancillary services are excluded).
annual report 2009 | 18
10/a.
4.
5.
10/b.
9/c
11/b, c,f
7/a.
Traders
Free market customers
(not entitled for universal service)
Figure 1 Transactions on electricity market
Majority of the production of domestic power plants was sold
through 5-8-year agreements concluded with the former public
utility wholesaler (MVM) (1), near a fourth of their production
(co-generated and renewable production) was bought by MA-
VIR in the framework of feed-in obligation at a fi xed price
specifi ed in decree (9/a). 15% of power plant production was
sold on the free market in the framework of short term (mainly
one-year) agreements (5). Typically, MVM’s agreements
with power plants are concluded for the period of 5 to 8
years. MVM sold nearly half of the electricity bought from
domestic power plants in the framework of 4-year framework
agreements, so-called VEASZs (long term electricity sales
contracts), at a regulated price specifi ed by HEO in its SMP
resolution to universal service suppliers supplying customers
entitled for universal service – at an administrative price (2-
3). In 2009, 40% of the domestic electricity consumption took
place through this channel characterised by authority price
regulation.
Co-generation and
renewable
producers
MAVIR
(system operator)
9/b.
9/a.
Export
11/a,e.
8.
MVM sold nearly the half
of the electricity it bought
from power plants to traders
through bilateral contracts
or through public capacity
auctions (4). Although
traders primarily based their
activity on import sources in
the fi rst year of the market
opening, the sales of power
plant capacities contracted by
MVM became the key source
of purchases for free market
traders in addition to import
(10/b) in a few years’ time
(after the initial excess import
capacities disappeared).
Signifi cant proportion of
primary trader purchases
went through secondary trade
within the trade sector (6),
before the electricity was
sold to users (7) or on export
markets (8). The sales
of electricity generated from
renewable energy sources or
co-generated with heat fall in a
special sale category (9/a-b). The system operator (MAVIR) is
obliged to purchase this electricity from the generators within
the framework of feed-in obligation (KÁT) at a price specifi ed
by law, and in an amount and within a period determined by
the resolution of HEO (9/a). Traders and universal service
suppliers are obliged to purchase the electricity sold within
the framework of KÁT in the proportion of their sales to users
(9/b, 9/c).
Market events and changes in regulation
The Decision 2008/C 223 of the European Commission which
closed the investigation initiated against Hungary in the