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Management of the Hungarian Energy Office - Magyar Energia Hivatal

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Based on environmental considerations (facilitating<br />

sustainable development on <strong>the</strong> long term), a separate tariff<br />

was elaborated in 2009 for <strong>the</strong> electricity supply <strong>of</strong> heat pumps<br />

(devices directly serving <strong>the</strong> operation <strong>of</strong> equipment using<br />

heat from solar energy and o<strong>the</strong>r renewable energy sources<br />

for supplying heat to buildings). The electricity at discounted<br />

price both with regard to product price and <strong>the</strong> price for system<br />

use may be bought (under specialised terms) by <strong>the</strong> beginning<br />

<strong>of</strong> <strong>the</strong> heating season <strong>of</strong> 2010-11.<br />

System use<br />

The fourth four-year (from 2009 to 2012) cycle <strong>of</strong> price<br />

regulation for electricity system use started on 1 January 2009.<br />

The specifi c administrative prices for natural monopol<br />

activities (transmission system operation, ancillary services,<br />

distribution) were determined by <strong>the</strong> Decree <strong>of</strong> <strong>the</strong> Minister <strong>of</strong><br />

Economy and Transport (GKM) 119/2007 (29.12) on charges<br />

for electricity system use. By virtue <strong>of</strong> domestic regulation<br />

taking into account also <strong>the</strong> various international practices,<br />

only those who receive electricity from <strong>the</strong> network have to<br />

pay a charge for system use. Those who feed electricity in <strong>the</strong><br />

network (power plants) are excluded from this obligation.<br />

HEO prepared in<br />

2008 and published<br />

on 31 October 2008 a<br />

methodology guildeline<br />

on price regulatory<br />

scheme <strong>of</strong> <strong>the</strong> new price<br />

regulatory period – in<br />

accordance with Section<br />

(5) <strong>of</strong> Article 142 <strong>of</strong> <strong>the</strong><br />

Electricity Act. This was<br />

modifi ed by HEO ex<br />

<strong>of</strong>fi cio on 22 October<br />

2009 – with regard to<br />

<strong>the</strong> fallback (exceeding<br />

5%) in <strong>the</strong> electricity<br />

turnover in 2009 implied by <strong>the</strong> economic crisis and to a<br />

few unavoidable correction revealed in <strong>the</strong> meantime by<br />

<strong>the</strong> practice. HEO prepared charges for system use <strong>of</strong> 2010<br />

accordingly, and proposed to <strong>the</strong> Minister <strong>the</strong> promulgation<br />

<strong>the</strong>re<strong>of</strong>. Charges for system use effective from 1 January 2010<br />

were published in <strong>the</strong> KHEM Decree 69/2009. (4.12) on <strong>the</strong><br />

amendment <strong>of</strong> <strong>the</strong> GKM Decree 119/2007 (29.12) on <strong>the</strong><br />

charges for electricity system use.<br />

The sum <strong>of</strong> charges for transmission system operator and<br />

ancillary services grew by 53.5% on 1 January 2010 (compared<br />

to 1 HUF/kWh in 2009), but still was lower than <strong>the</strong> value <strong>of</strong><br />

2008. The growth above was resulted from 3 key factors.<br />

• (Posterior) Price regulatory adjustments carried over from<br />

<strong>the</strong> previous cycle ending by <strong>the</strong> year 2008;<br />

• Signifi cant increase in <strong>the</strong> price <strong>of</strong> reserve capacities<br />

(primarily secondary ones) <strong>of</strong> Dunamenti and AES Tisza<br />

power plants entering free market because <strong>of</strong> <strong>the</strong><br />

termination <strong>of</strong> <strong>the</strong> PPA portfolio <strong>of</strong> MVM Trade Zrt;<br />

annual report 2009<br />

• Amendment in price regulation executed by HEO – in<br />

association with <strong>the</strong> decline in electricity turnover.<br />

Distribution charges dropped by average 0.4% on 1 January<br />

2010 compared to 2009 (within this, values <strong>of</strong> changes varied<br />

depending on voltage levels between -33% and +2%). Figures<br />

above are explained by <strong>the</strong> infl ation-indexed increase <strong>of</strong><br />

charges covering fi x costs and <strong>the</strong> declined purchase cost <strong>of</strong><br />

electricity loss <strong>of</strong> distribution network.<br />

An annual distribution charge <strong>of</strong> 1800 HUF (excluding VAT)<br />

(in <strong>the</strong> case <strong>of</strong> a controlled tariff category only 600 HUF)<br />

has been imposed even on <strong>the</strong> smallest consumption places<br />

including also residential customers since 1 January 2009. The<br />

costs that have been covered by <strong>the</strong> base charge since 2009<br />

were covered previously by <strong>the</strong> consumption proportional<br />

distribution turnover charge, so <strong>the</strong> increase in this charge was<br />

lower than it would have been without it. In o<strong>the</strong>r words, <strong>the</strong><br />

introduction <strong>of</strong> <strong>the</strong> base charge did not mean an effective rise<br />

in <strong>the</strong> costs, but induced a restructuring among <strong>the</strong> various<br />

groups <strong>of</strong> customers.<br />

System operation charges between 2008 and 2010 are shown<br />

in Tables 6. a) – c).<br />

6. a) Charges for transmission system operation and ancillary services (HUF/kWh)<br />

and <strong>the</strong> changes <strong>the</strong>re<strong>of</strong><br />

In <strong>the</strong> case <strong>of</strong> user (customer)<br />

connecting to distribution<br />

network<br />

Charge for transmission system<br />

operation<br />

Charge for ancillary<br />

services<br />

Total<br />

Table 6 Aggregated electricity system use charges (excluding VAT 1 ) from 2008<br />

From<br />

January<br />

2008<br />

1.000<br />

0.672<br />

1.672<br />

Tariffs<br />

From<br />

January<br />

2009<br />

0.577<br />

0.423<br />

1.000<br />

From<br />

January<br />

2010<br />

0.823<br />

0.712<br />

1.535<br />

Electricity under feed-in obligation<br />

Changes in tariffs<br />

January<br />

2009<br />

-42.3%<br />

-37.1%<br />

-40.2%<br />

January<br />

2010<br />

42.6%<br />

68.3%<br />

53.5%<br />

The prices for <strong>the</strong> electricity falling under feed-in obligation<br />

changed on 1 January 2009 and <strong>the</strong> prices for <strong>the</strong> co-generated<br />

electricity changed on 1 October induced by changes in gas<br />

prices.<br />

The increase in <strong>the</strong> prices in January was varying between<br />

2.25 and 6.6%. The signifi cant standard variation resulted<br />

from <strong>the</strong> application <strong>of</strong> different price regulation formulas <strong>of</strong><br />

<strong>the</strong> various energy sources.<br />

In October, <strong>the</strong> price <strong>of</strong> energy generated by gas fi red<br />

cogeneration – simultaneously with <strong>the</strong> decrease in natural<br />

gas prices on 1 October and according to <strong>the</strong> provisions <strong>of</strong> <strong>the</strong><br />

effective Government decree [389/2007 (12.23)] – decreased<br />

by 9.88%.<br />

annual report 2009 | 23

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