Management of the Hungarian Energy Office - Magyar Energia Hivatal

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hungarian energy office Small customers forced to enter the free market after the public utility supply ceased in 2008 usually stayed with their former supplier who supplied these customers in the possession of a trading license. The companies with universal service license, which are E.ON Energiaszolgáltató Zrt., Budapesti Elektromos Művek Nyrt., Észak-magyarországi Áramszolgáltató Nyrt. and Dél-magyarországi Áramszolgáltató Nyrt., are interested also in the operation of distribution networks through their subsidiaries or joint ventures. Universal service suppliers are owned by three multinational companies, E.ON, RWE and EdF, which supplied customers not only through their affi liates entitled to provide universal service, but also through their trading subsidiaries established with a view to perform free market activities. Thus, the total market share of these companies within the total domestic retail market was very signifi cant, approximately 77% even 6 years after the market opening in 2003. Despite the strong market concentration, there were traders entering the market, who also undertook to supply customers in addition to their domestic wholesale activity. Among these there are both multinational companies with several subsidiaries in the region, and small domestic traders. In 2009, there were Eurocent/kWh 300 250 200 150 100 50 0 Denmark Germany Italy Ireland Belgium Austria Netherlands Luxembourg Malta Sweden Spain annual report 2009 | 20 Norway Cyprus Slovakia Portugal Hungary United Kingdom Slovenia tariffs excluding taxes taxes Czech Republic Finland France Greece Croatia Turkey Poland Latvia Source: EUROSTAT 22-24 traders operating on the retail market, whose owners were fully independent from any of the domestic distribution network companies. Their market share was approximately 23%, but only 17% excluding the traders belonging to MVM group. Some of the traders were established to supply only a given circle of customers, primarily a company group. In 2009, the market share of the companies formerly being public utility suppliers continued to decrease. However, their market position is still very strong, since 95% of as much as hundred thousand users supplied in the framework of universal service (primarily small and medium size customers not entitled for universal service) are supplied by the traders of the three big incumbent suppliers. If the market position of suppliers and traders are calculated according to the consumption of their users instead of the number of the users, this rate is much smaller: former public utility suppliers and their joint ventures supplied 59% of free market consumption in 2009. Figures clearly reveal that new traders continue to vie only for large customers. In 2009, domestic prices in comparison with the prices of the European Union were in the middle range in the residential customer segment; with regard to prices to be paid by large industrial customers with consumption between 20 and 70 GWh, Hungary became one of the countries consuming electricity at the highest prices in 2009. (Figures 3 and 4). Romania Lithuania Estonia Bulgaria Figure 3 Comparison of electricity tariffs to be paid by residential users in the EU27 (2500 – 5000 kWh annual consumption; fi rst half of 2009) Eurocent/kWh 200 180 160 140 120 100 80 60 40 20 0 Denmark Hungary Slovakia Malta Germany Cyprus United Kingdom Netherlands Belgium Italy Ireland Czech Republic Latvia Spain tariffs excluding taxes taxes Turkey Croatia Norway Portugal Luxembourg Finland Source: EUROSTAT Figure 4 Comparison of electricity tariffs to be paid by non-residential users with annual consumption of 20 – 70 GWh in the EU27 (fi rst half of 2009) Poland Lithuania France Greece Romania Slovenia Bulgaria Estonia Sweden Measures to prevent abuse of market power The ex post authority tasks of competition surveillance specifi ed in the Act 57 of 1996 on Prohibition of Unfair and Restrictive Market Practices governing the posterior investigation and sanctioning of market abuses are performed by the Hungarian Competition Authority (Gazdasági Versenyhivatal, hereinafter GVH). The ex-ante interventional rights specifi ed in the Electricity Act, which aim to prevent market abuses are exercised by HEO. The Electricity Act applies special rules to avoid market abuses. It introduced the regulatory practice concerning licensees of signifi cant market power, which, although new in the regulation of the electricity industry, was already a known tool in the telecommunications sector. The Electricity Act and the associating enforcement decree include detailed rules on the designation of licensees as having signifi cant market power and their treatment. Within the framework of the new regulation, HEO as a supervisory authority may impose special additional obligations (e.g. selling electricity on public capacity auctions, costbased pricing, preparation of a bidding sample etc.) on all licensees including both wholesale
and retail market players who, following a market analysis, turn out to have signifi cant market power. The imposition of obligations all served to prevent the abuse of market power and enhance the effi ciency of competition. HEO, in cooperation with GVH and relying on market analyses, designates the licensees as having signifi cant market power and imposes special additional obligations adjusted to their market positions. HEO regarded the termination and renegotiation of PPAs in 2008 as a signifi cant event from the viewpoint of competition, therefore decided in September 2009 to launch a new SMP procedure both on wholesale and on ancillary services. SECURITY OF SUPPLY Security of electricity supply Preparations for winter HEO assessed the preparedness of licensees participating in electricity supply and the expected level of security of supply taking into account the below terms: a) Implementation of the annual planned maintenances and developments (plan and fact fi gures), b) Ensuring fuels required for the production expected in the winter months, according to fuel types, c) Availability of reserves specifi ed in GKM Decree 44/2002 (28.12) on the least measure of the stockpile of energy carriers for power plants of 50 MW or above and on the order of stockpiling, d) electric capacity, electricity balance, availability of reserve capacities, e) availability of cross-border capacities. annual report 2009 HEO examined and evaluated the preparations of licensees for the winter period, and drew the following conclusions: • The power plants accomplished their winter preparation programs. • The power plants accomplished their annual maintenance programs till 15 November 2009. • The supply of power plants with fuel is ensured by contracts. • All power plants for which the decrees prescribe the fuel stockpiles possessed the required stock. Gas restrictions due to the Russian-Ukrainien gas debate in January 2009 resulted in the fact that power plants suitable for oil fuelling had to switch to oil fuelling. The majority of power plants was successful in switching, however, there were some power plants that experienced technical problems. In the period of oil fuelling, stocks were decreasing, which referred to the fact that the oil could not have been replaced everywhere at due pace. HEO used the experience gained in the course of switching for the inspections of preparations for winter. In the winter period, the capacity balance of the Hungarian electricity system can be regarded as reassuring if the import capacities on the northern and eastern borders do not decrease signifi cantly, and the export on the southern borders do not increase signifi cantly. In this case, the available capacity is suffi cient to satisfy the demand, and also the reserve capacity, which is suffi cient according to the plans, is available. In the cold winter period, however, natural gas disconnection may occur in the case of the hydrocarbon fi red power plants, therefore the cooperation between the MAVIR dispatch centre and the MOL dispatch centre is a must. Though measures were taken in order to prevent the coal from being winterkilled, such an event cannot be fully excluded. A case like this could hinder the generation of the Mátra Power Plant and a quick measurement would be necessary to involve reserves. Network development The transmission system operator MAVIR Zrt. is responsible for ensuring the long term and secure availability of the system with its development, maintenance and operation activities on the transmission network constituting part of the Hungarian electricity system, in line with Hungarian and international requirements and thus providing for the maintenance of the domestic electricity supply at a European level. Within the framework of network development: annual report 2009 | 21
Page 1 and 2: Hungarian Energy Office Report on t
Page 3 and 4: Dear Reader, The regulation of the
Page 5 and 6: Table of contents SUMMARY . . . . .
Page 7: Management of the Hungarian g Energ
Page 10 and 11: hungarian energy office The Gas Act
Page 12 and 13: hungarian energy office REGULATION
Page 14 and 15: hungarian energy office currently a
Page 16 and 17: hungarian energy office COMPETITION
Page 18 and 19: hungarian energy office (Table 4).
Page 22 and 23: hungarian energy office • By Dece
Page 24 and 25: hungarian energy office High voltag
Page 26 and 27: hungarian energy office Trading mar
Page 28 and 29: hungarian energy office In 2009, fo
Page 32 and 33: hungarian energy office for natural
Page 34 and 35: hungarian energy office outages, wh
Page 36 and 37: hungarian energy office The dispatc
Page 38 and 39: hungarian energy office HUF/GJ 3 50
Page 40 and 41: hungarian energy office Service qua
Page 44 and 45: hungarian energy office ENERGY SAVI
Page 46 and 47: hungarian energy office energy mix
Page 48 and 49: hungarian energy office appropriati
Page 50 and 51: hungarian energy office GDP, Electr
Page 52 and 53: hungarian energy office Trend of Na
Page 54 and 55: hungarian energy office Development
Page 56 and 57: hungarian energy office 4. DATA ON
Page 58 and 59: hungarian energy office The Yearly
Page 60 and 61: hungarian energy office Data on Bre
Page 62 and 63: hungarian energy office Purchase of
Page 64 and 65: hungarian energy office 5. DATA ON
Page 66 and 67: hungarian energy office The Yearly
Page 68 and 69: hungarian energy office Summary Dat
Page 70 and 71:
hungarian energy office Typical Ind
Page 72 and 73:
hungarian energy office Residential
Page 74 and 75:
hungarian energy office Regulated E
Page 76 and 77:
Table 7.5 Natural Gas Tariffs Valid
Page 78 and 79:
hungarian energy office Natural Gas
Page 80 and 81:
hungarian energy office 3. Storage
Page 82 and 83:
hungarian energy office Govt. Decre
Page 84:
hungarian energy office DIRECTIVES
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Management of the Hungarian Energy Office - Magyar Energia Hivatal

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