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Regulation and Gas Market Opening in Slovakia

Ján Klepáč, Vice-Chairman of the Regulatory Council and Regulatory Office for Network Industries ÚRSO Bajkalská 27, 820 07 Bratislava e-mail: klepac@urso.gov.sk , tel.: +421 2 5810041 9. Regulation and Gas Market Opening in Slovakia. SHORT HISTORY OF THE SLOVAK REGULATION IN GAS INDUSTRY.

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Regulation and Gas Market Opening in Slovakia

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  1. Ján Klepáč, Vice-Chairman of the Regulatory Counciland Regulatory Office for Network IndustriesÚRSO Bajkalská 27, 820 07 Bratislavae-mail: klepac@urso.gov.sk, tel.: +421 2 58100419 Regulation and Gas Market Opening in Slovakia Úrad pre reguláciu sieťových odvetví

  2. SHORT HISTORY OF THE SLOVAK REGULATION IN GAS INDUSTRY • Enactment of the Act No. 276/2001 Coll. of the National Council of the Slovak Republic, June 14, 2001 • Network industries: electro-energy, gas industry, heating, water industry • Establishment of ÚRSO, August 1, 2001 • Appointment of the Regulatory Council members, October 16, 2001 • Conclusion of Chapter 14 – “Energy” – within the framework of access negotiations with the EU • Implementation of Directives 96/92 and 98/30 of the European Parliament and of the Council to Slovak legislation • 4 basic regulatory decisions for the gas industry issued by ÚRSO from December 2001 to December 2002 • SPP privatisation, March 14, 2002 Úrad pre reguláciu sieťových odvetví

  3. Regulatory Decision for Gas Industry • Decision 523/01 Coll. concerning the method of maximum price calculation for delivery of natural gas to customers, December 2001 • Amended by Decision 650/02 Coll., November 2002 • Regulatory method incentive regulation based on profitability limitation • Regulatory formula Mt = CPt + Pt - Kt • Gas market opening from 1/1/2003 eligible customer consumption volume >= 15 mil. cubic meters of NG/year • Decision 746/02 Coll. on extent of regulation for small regulated subjects < 100 mil. cubic meters of NG/year Úrad pre reguláciu sieťových odvetví

  4. Separate Decision 0088/2002/03 Concerning the Maximum Price and Tariff Setting for Gas Transmission in Relation to Eligible Customers, issued by ÚRSO for SPP, a.s., December 2002 • Calculation for the category Wholesale customers: P = F + H + V • P … price for transmission (SKK) • F … fixed cubic rate for capacity booking (0.67 SKK/cubic meter) x booked capacity per month (cubic meters) • H … annual performance rate (1952.88 SKK/(cubic meter/hour)) x maximum booked hourly capacity (cubic meter) • V … variable rate for transmitted capacity in the category Wholesale customers (1.32 SKK/cubic meter) • Note: The principle known as the “post stamp principle” is applied in the whole territory of the Slovak Republic. In the years 2003 - 2004, there are 45 eligible customers in the Slovak Republic. Úrad pre reguláciu sieťových odvetví

  5. Application of Regulatory Decisions in Gas Industry • Regulated subject SPP, a.s., with 97% share in the market + 50 small gas suppliers • Average maximum price increasing by 32.7% from 1/1/2003 and by 5.2% from 1/1/2004 • Eliminated cross subsidies in relation to all customer categories • ÚRSO may only influence by regulation 37.86% of maximum price; the rest makes the purchase price of the natural gas. Úrad pre reguláciu sieťových odvetví

  6. Chart 1 Comparison of average selling gas prices by tariff groups Úrad pre reguláciu sieťových odvetví

  7. Chart 2 Illustration of quantity of gas consumption in unit selling price Úrad pre reguláciu sieťových odvetví

  8. GAS MARKET OPENING ISSUES AND POSSIBLE SOLUTIONS Úrad pre reguláciu sieťových odvetví

  9. Exploitation and production Nafta a.s. Gbely Import SPP a.s. Transmission SPP a.s. Underground storage Nafta a.s. Gbely, Pozagas a.s. Malacky Distribution SPP a.s. Sale SPP a.s. Customer GAS INDUSTRY CHAIN IN SLOVAKIA – CURRENT STATE Úrad pre reguláciu sieťových odvetví

  10. Act on Heating Act on Regulation Act on Energy Operation Rules of Gas Networks Gas Market Rules BASIC CHART OF THE SLOVAK ENERGY LEGISLATION Ministry of Economy RONI Gas Trans. Rules Techn. Inter. Rules TSO Order DSO Order SSO Order Úrad pre reguláciu sieťových odvetví

  11. NEW LEGISLATION APPLICATIONIN THE GAS TRANSMISSION AREA PRICE SETTING GAS MARKET RULES Úrad pre reguláciu sieťových odvetví

  12. PRICE SETTING - CURRENT STATE Maximum price for natural gas supply to the customers calculated on the basis of the ÚRSO Decree No. 523/01 Coll. consists of the • commodity price • gas transmission price • gas distribution price • underground gas storage price Úrad pre reguláciu sieťových odvetví

  13. TRANSMISSION NETWORK ACCESS TARIFFS In the transmission contract, there are ensured the following services: • ordered transmission capacity • ancillary services • gas for operating needs • other services Úrad pre reguláciu sieťových odvetví

  14. Gas Market Rules • Primary linepack reserved for DSO´s physical balancing • Negotiated access to gas storage facilities • Virtual and real access to storage facilities • Single TSO • Single DSO • Entry – exit system in gas transmission • Post – stamp principle in gas distribution • Slovak Republic as a single balancing zone • Daily balancing regime Úrad pre reguláciu sieťových odvetví

  15. Úrad pre reguláciu sieťových odvetví

  16. Úrad pre reguláciu sieťových odvetví

  17. Ján Klepáč, Vice-Chairman of the Regulatory Counciland Regulatory Office for Network IndustriesÚRSO Bajkalská 27, 820 07 Bratislavae-mail: klepac@urso.gov.sk, tel.: +421 2 58100419 Regulation and Gas Market Opening in Slovakia Úrad pre reguláciu sieťových odvetví

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