Regulatory office did not make a decision about the price changes for natural gas

CASE: Regulatory office did not

make a decision about the price

changes for natural gas 

Regulatory Office for Network Industries (ÚRSO) did not make a decision about the price changes for natural gas for the upcoming year 2011. According to the director of the Regulatory council Jozef Holjenčík, results from the ongoing price proceeding will be announced at the end of this month. In case of a price rise, which should not be a double-digit number, it will be valid from January 1st 2011.

Holjenčík: Rise in gas price should not acquire a double-digit number

„In order to set the price for natural gas in the future, the regulatory office needs to acquire data from the last month of this year. Due to this fact we have postponed the final decision on natural gas prices for households valid from January 1st 2011. The price proceeding ex offo does allow such a process. Under any circumstances we still stand to our previous statements that if we will not be able to avoid a rise in natural gas prices, it will definitely not be a double-digit figure,” informed Holjenčík.

ÚRSO has begun the price proceeding at the end of November on its own from its official authority (ex offo). It happened so for the first time since the Office exists. Before it started the proceeding, Slovak Gas Industry (SPP) has proposed 8 proposals for increasing price of gas for households.

„Starting off on November 25th 2010, ÚRSO has initiated the price proceeding based on its own impulse. But it is not easy to come to a conclusion in just a few days. Although ÚRSO has at its disposal its own analyses and predictions, in order to calculate the price it needs the most exact key data, which are currently influenced by turbulent effects, most importantly by the exchange rate between euro and US dollar, but also the development of oil product prices on world markets,” concluded Holjenčík.

Tariff for running the system will decide about the electricity price in 2011

The Regulatory office issued on November 30th 2010 a new price decision on the maximum prices for electricity supplies for households that is valid for 2010 for three distribution companies (ZSE Energia, SSE, VSE). The approved price decision means that average prices for electricity supplies for 2011 will fall by 0,13 % compared with 2010 and fees for distribution will also annually fall by 0,44 %. “

Holjenčík said, that the stated, but also other components of the end price for electricity should in this year „have a stabilized level and also the outlooks for 2011 are positive, therefore the price should not be higher.” „But these positive circumstances might be threatened by the so called tariff for operating the system (TZPS), which included supporting electricity generated from renewable energy sources (RES), which has to be covered by all end consumers according to the EU rules,” he warned.

The rate of TZPD will be influenced the most by the law amendment on support for electricity production from RES, which is currently in the negotiating program of the National Council of SR. „Price negotiations that will also set the tariff for operating the system were not ended yet, because we are waiting for the conditions for supporting electricity production from RES to be set by law, as this is not in the competence of ÚRSO but NC SR. This is the hidden key to the question on how will the prices for electricity look like in the upcoming year.”

Prices for heat supplies should not change

According to Holjenčík, the situation in heat energy is always individual and is influenced by the fuel type and also conditions under which heat is supplied. Price proceedings are according to him culminating at this time. December is the most exposed month especially for setting the price for heat for more than 300 producers, whereas most of the producers use natural gas as fuel. „When it comes to prices for heat supplies, we are not expecting a rapid change in the price. Of course it all depends on how ÚRSO will set the price for natural gas.”

Prices for utility and drinking water should increase slightly

Prices for drinking and utility water will according to Holjenčík increase by an average of 1,7 %. „Prices for distributing drinking water via the public water-supplies will remain on the price level as in 2010, prices for diversion and cleaning of utility water by the public canalization should increase by at most 3,6 %,” concluded Holjenčík.

Week in Slovakia

Monday – 29th November 2010

Price regulations in Slovakia are putting a break on the market with natural gas. According to Martin Hollý from the company Nafta it is administratively demanding and not flexible. Development of the spot markets creates demand for flexible products in the field of renting storage capacities in natural gas storage tanks. As Mr. Hollý stated, traders with gas demand short-term products, but the administrative extends the whole process even by three months.

Tuesday – 30th November 2010

The first station in Slovakia for recharging electro mobiles was put into operation in Košice. Owners of vehicles running on electricity as well as owners of hybrid cars can recharge their accumulators for free until the second half of next year. The charging station is located in front of the residence of the company VSE which is running the station. Costs for using electro-mobiles are around 2 euro for every 100 km and it is influenced by the current price for electricity.

A cogeneration centre was put into operation in Svit. Five facilities reach a total electric capacity 10 MW. The heat from the centre will be used for heating one part of the town and also an industry park. The total costs should reach around 12 thousand euro.

A steam-gas cycle with a total installed capacity of 60 MW for electricity generation was put into operation in Považská Bystrica. It will also supply 8,500 households with heat. Costs for construction and operation reached 50 million euro.

Wednesday – 1st December 2010

The Regulatory Office for Network Industries (ÚRSO) did not announce changes in the prices for natural gas for the upcoming year. The price procedure is still in progress. According to the chief of the regulatory board Jozef Holjenčík, the results will be known at the end of December and will come into force from January 1st 2011. As Holjenčík stated, it is not likely that the possible price rise will be a double number.

European Court for Human Rights (ECHR) has made a court ruling in favor of Slovakia in the cause „Ducký´s bills of exchange”. But even after the verdict Slovak Republic did not completely disburden the possibility that it will have to refund the bills of exchange worth of 320 million Czech crowns. The final decision about this issue needs to be given by the court in Bratislava, states the decision from Strasbourg.

Thursday – 2nd December 2010

According to the substitute director of the Regulatory Office Jozej Holjenčík, ÚRSO has to face attacks which question its impartiality and autonomy. Holjenčík is strictly against such accusations. He also made a statement with regards the dispute between the Minister of Economy Juraj Miškov, which he says is only a result of insufficient communication.

European Union and World

Monday – 29th November 2010

In Czech Republic a wave of suspicions have arisen that the system of state subsidies for biomass are being misused. Instead of biomass it is believed that some of the business men are burning rubber tires or other communal waste. If it is true, the state is loosing millions of Czech crowns from public sources.

It is more than likely that citizens of Czech Republic will pay more for gas in 2011. However, according to analysts the rise will be only moderate and should not be higher than 2 %. The reason behind the smaller number is an increase of competitiveness on the home market, price movement on the spot market in Leipzig, oil price prognosis as well as development of crown course towards dollar.

Europe might not be able to finish all the planned natural gas pipelines. According to analysts’ construction of some of them needs to finished, due to the fact that the demand for natural gas will increase until the end of this decade.

Mexico will partly open up its oil market. The sector was nationalized in 1983.The state company Pemex has announced an auction for extraction right in three Mexican localities. The extraction should start in February 2011. The reason why Mexico enabled a foreign capital to enter its market is a low level of competitiveness of the home oil industry in comparison with the foreign one.

Russian Gazprom and Ukrainian Naftogaz have settled their dispute from 2008-2009. The agreement came as an insurance that during this winter a gas crisis similar to that one from January 2009 will not repeat.

Tuesday – 30th November 2010

Czech regulator has announced the prices for electricity for the upcoming year. Households will pay 4, 6 % more for electricity and companies will pay 5, 2 %. The Energy regulatory office (ERÚ) was calculating with the price decision from the current legislative and assumption that the amendment on RSE will pass the legislative process.

Iraq could triple its oil extraction by 2017. The extraction could reach eight million barrels of oil per day. It was announced by advisor of the Iraq Prime Minister and ex-Minister of Oil Industry Sarim Ghazban.

Wednesday – 1st December 2010

Bulgaria will finish the construction of the nuclear power plant in Belene. The agreement to create a new joint company was signed by Russian company Rosatom and Bulgarian electricity concern NEK. The total installed capacity of the power plant in Belene should be 2,000 MW. Bulgaria is building the power plant since the 80´s.

A consortium led by the British company BP is planning to build a new pipeline which would help to increase the exporting capacity of Azerbaijan until 2017 to the level of 24 billion cubic meters per year. This could happen after putting into full operation the extraction project Shah Deniz. The total natural gas reserves in Azerbaijan are estimated at approximately 3- to 5- thousand billion cubic meters.

USA has extended its hydrocarbon reserves. It comes as a consequence of the new modern extraction technology which makes unconventional fields, mostly those of slaty gas more available. Natural gas reserves were extended by 11 % in 2009 and currently the US has at disposition 8- thousand billion cubic meters of natural gas. Also the oil reserves were increased by around 9 % reaching 22, 3 billion barrels.

Thursday – 2nd December 2010

Germany is considering changing the formula by which the state-purchasing price for electricity from photo-voltaic power plants is calculated. According to the Minister of Environment, Norbert Röttgen, the country can not guarantee the current prices after 2012.

Poland might have problems with covering the domestic demand for electricity. Neglecting construction of new sources and increasing demands of energy consumption will probably change Poland into a country that will be dependant on importing electricity from abroad. Electricity consumption in Poland during the 10 months of 2010 has increased annually by 4,2 % and analysts expect that it will also rise in the upcoming year.

The USA will allegedly ban carbohydrate extraction in the Gulf of Mexico for the upcoming 7 years. The reason is the ecological catastrophe resulting from the explosion at the Deewater Horizon oil field above the Macondo drill which happened in April this year. Oil extraction will be possible only at those drills that are currently in operation.

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