Management of the Hungarian Energy Office - Magyar Energia Hivatal

Licensing activity of the HEO in 2009
In 2009, HEO issued 12 resolutions on district heat licensing.
From among these resolutions, 4 were operational licenses for
district heat production, 2 prolonged establishment licenses,
4 modifi ed existing operational licenses, 2 were approval of a
demerger or acquisition of controlling interest. HEO published
the resolutions in all cases.
COMPETITION
District heat supply is a local public utility service bound to the
pipeline system. One supplier operates in one area; therefore
competition among suppliers for the customers is not possible.
Only a limited competition can be imagined in district heat
production, primarily by the introduction of cogeneration, or
in the case of customer switching, when a customer switches
to another heating method, but it is still a limited possibility.
More and more owner-occupied blocks are breaking off the
district heat system because of the discontentment experienced
concerning the price and occasionally the quality of the district
heat supply.
District heat suppliers supply thermal energy to household
customers at administrative prices determined by the
representative council of the local government. Thermal
energy is purchased from district heat producers (power
plants) and/or produced in boilers by the suppliers themselves,
more and more frequently using cogeneration equipment. The
number of settlements where the supplied thermal energy
derived at least partly from power plants co-generating heat
and electricity was more than 60. District heat production
increasingly uses the economic advantages of co-generation,
which is further enhanced by the feed-in obligation of
electricity and the associating subsidy to the administrative
price. In the case of co-generating small power plants the
obligatory feed-in will expire at the end of 2010 and in the
cases where HEO did not extend the feed-in period because
of the return of the investment, this can affect the price of the
district heat produced.
At the same time the competitiveness of district heat supply
compared to central heating may be signifi cantly improved by
the fact that the VAT has been reduced to 5% from 2010.
SECURITY OF SUPPLY
The regionally competent local governments - in the capital,
the metropolitan municipality - are obliged to ensure through
a licensee or several licensees the district heat supply of
facilities that are supplied by district heat.
Most of the district heat supply companies are owned by local
governments and there are some places, where the district heat
producer (a power plant subject to electricity license) has also
acquired some shares of the district heat suppliers. In some
settlements, however, the district heat supply company is
operated by private companies based on a concession contract.
annual report 2009
In those cases, when a district heat supplier buys the majority
of the district heat from a power plant, and the power plant is
privately owned or indirectly state-owned, the possible debates
between the supplier and the power plant may jeopardize
supply. In these debates, HEO may act as a mediator, but the
debates can only be solved by the cooperation of the producer,
the supplier and the local government. The recent years
witnessed an effort evolving, where the local governments
tried to take measures to solve the problem of district heating
through the local government’s own company or own supplier.
PRICE PREPARATION, PRICE REGULATION
The heat production prices are uncontrolled. The charge of
joining the district heat supply and the charge of household
district heat supply is determined by the representative council
of the local government in a municipal regulation. Before the
determination of the price the minister responsible for energy
affairs delivered his opinion on the prices of district heat
supply. This process was modifi ed from 1 July 2009 in such a
way that suppliers submitted their proposal on price increase
to HEO. The representative council can approve the proposal
on price increase depending on the resolution of HEO.
In 2009 the district heat suppliers submitted proposals on
price change of district heat price for 25 settlements. Most of
the proposals intended to decrease the charge. 19 cases were
closed with resolutions in 2009, thereof one proposal was
refused, the intention of which was to increase the charge.
PUBLIC SERVICE OBLIGATION AND CONSUMER
PROTECTION
The regionally competent local government is responsible
for ensuring the district heat supply of the establishments
supplied with district heat. Most of the district heat supply
companies are owned by local governments; the licensing
authority is the notary of the local government; the heat prices,
charges are determined by the representative council of the
local government, therefore the entire chain is in the hands of
the local government, except for the power plant generation
of district heat.
In order to ensure the transparency of district heat supply,
the enforcement decree of the District Heat Act defi ned the
types of fi nancial data and the according technical data to
be published by the district heat suppliers. In the interest of
the better informing of the household consumers, district
heat suppliers supplying 1000 or more fl ats had to create an
information system (webpage).
The regional consumer protection inspectorates of the
Hungarian Authority for Consumer Protection are responsible
for consumer protection affairs.
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