5 PRESUPUESTO DE COLOMBIA
AÑO Gasto en Defensa y
Business Environment in the Electricity Sector
Opening the electricity market continued faster after legislative changes in August 2013, which allowed medium-voltage clients to switch their supplier. The effective speed of market opening increased to 45% of the country’s net final consumption in 2014. Households and businesses connected to the low-voltage grid are supplied at regulated prices using a system of quotas in accordance with the energy law and decisions of the regulator—the State Energy and Water Regulatory Commission (SEWRC). Producers offer electricity on the basis of public tendering procedures organized for delivery periods of usually 1 to 12 months. The open electricity market currently involves around 3,500 end clients, 100 traders, and 10 power plants.
The country’s gross electricity production grew by 7% to 47 TWh, net final consumption remained relatively unchanged at 33.5 TWh. However, net export grew by 50% to 9.2 TWh following a substantial reduction in export fees (from 34.26 BGN/MWh in 2013 to 6.35 BGN/MWh).
A new market control system was introduced by the market operator, Electricity System Operator EAD (ESO) in June 2014 and a new balancing mechanism was established on the basis of offers and availability of suppliers of ancillary services. Joint annual, monthly and daily auctions of cross-border capacities are organized at all borders except for the border between Bulgaria and Turkey, where a 50/50 split is implemented.
CEZ Group in the Republic of Bulgaria
Regulation and Control
The regulator issued a new extraordinary price decision with effect from December 30, 2013, decreasing the level of allowable technological losses for the distribution company from 10% to 8%. Capital expenditures continued not to be allowed to be included in the price of electricity in advance, as is the case since the beginning of the third regulatory period. They are expected to be included afterwards, upon the submission of a detailed report. CEZ Razpredelenie Bulgaria AD filed an appeal against the price decision with the Supreme Administrative Court of the Republic of Bulgaria.
The regulator issued a decision on new prices with effect from July 1, 2014. Technological losses remained at the same level of 8%. The decision allows companies to bill a price of deviation balancing in their monthly bills. The maximum permissible deviation from a prediction that can be included in the final price of electricity is up to 0.5% for CEZ Razpredelenie Bulgaria AD and up to 1.5% for CEZ Elektro Bulgaria AD. Both CEZ Razpredelenie Bulgaria AD and CEZ Elektro Bulgaria AD filed an appeal against it with the Supreme Administrative Court of the Republic of Bulgaria; see Litigation and Other Proceedings for details. The regulator issued a decision on new prices with effect from October 1, 2014, which meant an increase of 9.79% in the final selling price. An appeal against this decision was also filed with the Supreme Administrative Court of the Republic of Bulgaria by CEZ Razpredelenie Bulgaria AD and CEZ Elektro Bulgaria AD; see Litigation and Other Proceedings for details.
On March 19, 2014, the regulator SEWRC initiated proceedings against CEZ Elektro Bulgaria AD to revoke its license to supply electricity. The company considers the regulator’s decision groundless.
The regulator conducted an audit of licensed activities in the period from July 1, 2008 through November 30, 2013 at CEZ Razpredelenie Bulgaria AD in 2014. The audit specification included an analysis and evaluation of all costs associated with the performance of licensed activities; 127 reports stating a breach of rules were issued during the audit. This was followed by issuing of 981 administrative decisions on a breach of obligations; ensuing steps are described under Litigation and Other Proceedings. There were also tax audits conducted by the National Revenue Agency at CEZ Razpredelenie Bulgaria AD, CEZ Bulgaria EAD, and CEZ Elektro Bulgaria AD. The audits concerned income tax, value-added tax, and other taxes. CEZ Elektro Bulgaria AD appealed in part against the prepared audit reports and also filed a claim with the Administrative Court in Sofia for a corporate tax refund amounting to BGN 1m (approximately CZK 14m) for allowance for receivables, applying the three-year period of limitation. The regulator, the Ministry of Economy, and the Commission for Consumer Protection checked compliance with specified meter reading dates in December 2014. The presented document showed that the company complied with legal requirements in a timely manner.
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Electricity Generation
Electricity Generated in the Republic of Bulgaria, Gross (GWh)
The coal-fired Varna power plant generated a total of 944 GWh of electricity in 2014, 378 GWh (67%) more than in 2013. The main reason for the growth was higher production for the free market. By contrast, the power plant generated less electricity for the regulated market due to zero activation of the cold reserve by the market operator ESO and less quota production (production for the regulated part of the market in the amount specified by the market operator ESO at the price stipulated by the regulator SEWRC). The photovoltaic power plant in Oreshets supplied 5 GWh of electricity to the grid.
Heat Generation
The Varna power plant generated and supplied only a small amount of heat to sites in its vicinity (the village of Ezerovo). Revenue from this commodity was only marginal, amounting to approximately CZK 0.3m. No heat generation and sales are planned for 2015.
Capital Construction
In view of the current conditions on the electricity markets, CEZ Group decided in 2014 not to invest in environmental upgrades to the Varna power plant, which is a prerequisite for its continued operation after December 31, 2014, because such investment cannot generate positive return under the current conditions.
The implementation of the project for the construction of a biomass combined heat and power plant (BCHP) at Bara Group OOD, with a maximum installed capacity of 2 MW, continued in 2014. CZK 0.04bn was invested in the project in 2014. The capital expenditure is made in connection with the obligation to invest in renewables in Bulgaria, set down in the contract for the purchase of the coal-fired Varna power plant. A contract for engineering, delivery, and construction (EPC contract) was signed in May 2014, construction also started in May 2014, and most engineering work has been finished by now. Some of the crucial equipment, such as a Jenbacher engine, and ZeroPoint gasification unit have been delivered. Plant operation and
maintenance policies are being prepared at the moment.
Installed Capacity
CEZ Group has an installed capacity of 1,265 MW in Bulgaria: 1,260 MW in a coal-fired power plant in Varna and 5 MW in a photovoltaic power plant at Oreshets.
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5 566
944
0 200 400 600 800
coal-fired power plants photovoltaic power plants 2013
2014
Total
572 949
Location of CEZ Group’s Generation Facilities in the Republic of Bulgaria
List of CEZ Group Power Plants in the Republic of Bulgaria
Coal-Fired Power Plants
Plant Owner Type Installed capacity (MW) Year
of fuel as at December 31, 2014 commissioned
Varna TEC Varna EAD hard coal 6 x 210 1968 –1969, 1977–1979
Coal-fired power plants, total 1,260.0
Varna power plant Units 4, 5, and 6 have been shut down since January 1, 2013, January 1, 2014, and January 1, 2015, respectively, due to non-compliance with environmental limits set down in the integrated permit; Units 1, 2, and 3 are operating under a “derogation regime”, with limited operating hours per year.
The shutdown units cannot operate until a costly environmental upgrade is made to the power plant. However, the operation of all units is also conditional on a reconstruction of the fly ash and slag repository to comply with European directives. The situation in Bulgaria’s energy sector and the current state of related legislation do not allow making a positive return on investment in necessary adjustments. Negotiations are currently held with parties interested in leasing or buying the power plant.
Photovoltaic Power Plants
Plant Owner Installed capacity (MW) Year
as at December 31, 2014 commissioned
Oreshets Free Energy Project Oreshets EAD 5.0 2012
Photovoltaic power plants, total 5.0
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VARNA VARNA Sofia Sofia VARNA ORESHETS ORESHETS ORESHETS Sofia Power sources hard coal photovoltaic
Solid Fossil Fuels and Sorbents
The Varna power plant consumed a total of 416 thousand tons of hard coal (anthracite) in 2014. The demand was covered by imports from Russia and Ukraine; the coal was transported to Varna from Mariupol, Ukraine in 2013.
Electricity Generation Outlook for 2015
The Varna power plant was shut down on January 1, 2015 due to non-compliance with environmental limits, so no electricity generation is planned in 2015. The Oreshets Power Plant is planned to generate 6 GWh; the prepared biomass power plant should generate 7 GWh of electricity.
Electricity Distribution
Electricity Distributed to End Customers in the Republic of Bulgaria (GWh)
The volume of electricity distributed to end customers in the area served by CEZ Group in 2014 increased by 69 GWh (1%) year-on-year, to 9,083 GWh. The reason is a slight increase in consumption among residential customers and corporate customers at the medium-voltage level; in contrast, the consumption of corporate customers at the low-voltage level decreased. In year-on-year terms, losses in the distribution grid were reduced, with reductions seen in both technical losses due to targeted investments in grid infrastructure (transformer replacements and upgrades, replacements of electric meters) and non-technical losses thanks to further optimization of the management process.
Capital Construction
Capital expenditures on distribution in Bulgaria were CZK 0.7bn in 2014. They were aimed primarily at improving distribution grid quality, replacing electric meters, critical infrastructure in Sofia, new connections to the distribution grid, and purchasing power structures pursuant to the Energy Act. Capital expenditure in 2015 will be aimed at the same areas.
Electricity Sales
Electricity Sold to End Customers in the Republic of Bulgaria (GWh)
The sales company CEZ Elektro Bulgaria AD sold a total of 7,392 GWh of electricity to end customers in 2014, which was a decrease of 1,180 GWh year-on-year. The decrease was due to lower sales to corporate customers at the medium-voltage and low-voltage levels, with some of them switching to a different seller on the free market.
CEZ Trade Bulgaria EAD sold 1,974 GWh of electricity to end customers on the free market in 2014.
Electricity Distribution and Sales Outlook for 2015
CEZ Group expects a small decrease in the volume of electricity distributed in 2015 due to a slight decrease of consumption by residential customers. As for electricity sales, it expects a decrease on the year 2014 in connection with further liberalization of the corporate segment, with some customers switching to another electricity seller.
Shot No.: 115 CEZ Group–––––––– CEZ Group Abroad
0 2,000 4,000 6,000 8,000 2013 2014 Total 9,014 9,083 1,211 1,974 8,572 7,392 0 2,000 4,000 6,000 8,000
CEZ Elektro Bulgaria AD CEZ Trade Bulgaria EAD 2013
2014
Total
9,783 9,366
Romania
Business Environment in the Electricity Sector
The legal framework of the energy sector is similar to the model common in other EU member states. Activities have been unbundled and partially privatized. However, most generation assets are concentrated in state-owned companies. Besides the state-owned companies Hidroelectrica, Nuclearelectrica, and Termoelectrica, major producers also include several private entities, of which the largest ones are the Fântânele and Cogealac wind parks owned by CEZ Group. Some municipal or local heating plants are owned by municipalities. The transmission grid is managed by Compania Naţională de Transport al Energiei Electrice “TRANSELECTRICA” S.A. The distribution segment has the highest level of private ownership. Five distribution regions are served by distribution companies that were privatized to foreign investors, including CEZ Group.
The state-owned stake in the company Electrica, which serves around 3.5m customers in the remaining three distribution areas, was privatized under the auspices of the International Monetary Fund and the European Bank for Reconstruction and Development (EBRD) in June 2014. The form was an initial public offering at the Bucharest and London stock exchanges. Regulatory activities are undertaken by the Autoritatea Naţională de Reglementare în domeniul Energiei (ANRE). Liberalization of the sales segment continued during 2014 according to the specified schedule. Full market liberalization in the corporate customer segment was completed in 2013 and should be completed for households in 2017.
A major portion of production is traded in the form of either annual contracts or daily deliveries. The administrator of the electricity market is Societatea Comercială Operatorul Pieţei de Energie Electrică şi Gaze Naturale—OPCOM S.A.
A market coupling project was successfully launched on November 19, 2014, under which Romania was to join the common wholesale electricity market of the Czech Republic, Hungary, and Slovakia. The wholesale electricity markets of the participating countries are now coupled within a common platform.
Romania supports electricity generated from renewable energy sources through “green certificates.” The Romanian government amended the renewables support program in July 2013, with the result that the negotiability of a portion of allocated green certificates was suspended. Wind parks can temporarily trade in just one of two certificates allocated per generated MWh. The withheld certificates for wind parks should be traded from January 1, 2018 until the end of 2020.
CEZ Group in Romania
Regulation and Control
The regulator published a new decision on tariffs for end customers with regulated electricity prices effective from July 1, 2014. The variable component of the most widely used household tariff grew by 1.88%; the average overall price for households decreased by 0.9%. The regulator also abolished an export surcharge on exported electricity with effect from the same date. The regulator ANRE increased distribution tariffs for all voltage levels year-on-year with effect from January 1, 2015. The increase is 4.6% at the high voltage level, 4.5% at the medium-voltage level, and 0.16% for customers at the low-voltage level. For CEZ Distributie S.A., this means an average tariff increase of 1.59%. In addition, there was an extraordinary change to the tariff decree, by which the regulator decreased the regulated return on distribution assets from the original 8.52% to 7.70%. Pursuant to Act No. 220/2008 on renewable energy sources, individual notification to (separate approval by) the European Commission is required for renewable energy sources with an installed capacity greater than 125 MW. The temporary two-year accreditation for the allocation of green certificates to the Cogealac wind park, consisting of 101 wind turbines with an installed capacity of 252.5 MW, expired on September 30, 2014. Similarly, the temporary accreditation for a part of the Fântânele park (Fântânele Vest) expired in 2013 and the situation remained unaltered in 2014. Documents for the individual notification were prepared by CEZ Group within statutory time limits and submitted to Romanian authorities as early as in January 2012. However, government measure OUG 57/2013 modified support for renewable energy sources during the process of approving the individual notification of Fântânele Vest and the European Commission requests that it should be notified before the Commission approves the individual notifications of Fântânele Vest.
As of April 7, 2015, the notification of government measure OUG 57/2013 was not yet approved by the European Commission. The second part of the Fântânele wind park, “Fântânele Est” with 34 wind turbines and 85 MW of installed capacity, is not subject to this condition and its accreditation for green certificates is valid for 15 years.
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Temporary allocation of certificates until the Commission approves the existing aid scheme and the individual form of support for Fântânele Vest and Cogealac was included in an amendment to Act No. 220/2008 on support for renewable energy sources, which was approved by the government on October 7, 2014. A plenary session of the Senate held on February 5, 2015 passed an amendment to Act No. 220/2008 on support for generation of renewable energy, which was then referred to the Parliament’s Economic Committee. The Committee approved the amendment without any comments on February 24, 2015 and released it for approval by a plenary session of the lower chamber of the Parliament. In its session held on March 11, 2015, the lower chamber postponed the debate on the law and returned it to the Parliaments’s Economic Committee. The Economic Committee discussed and approved additional comments on March 31, 2015. Once the amendment is authorized by the Parliament’s Environmental Committee, it will be submitted for approval by a plenary session of the lower chamber again.
Electricity Generation
Electricity Generated in Romania, Gross (GWh)
The total production in 2014 remained at the same level as in 2013. A year-on-year decrease of 84 GWh in production at the Fântânele and Cogealac wind parks was caused by worse weather conditions. Upgraded hydro plants owned by TMK Hydroenergy Power S.R.L. generated 90 GWh in the first year of their full operation, fully compensating lower production at the wind parks.
Capital Construction
Capital expenditures went into the infrastructure of the Fântânele & Cogealac wind parks as well as into TMK Hydroenergy Power S.R.L. in 2014. Overall capital expenditures on electricity generation were CZK 0.1bn in 2014.
Location of CEZ Group’s Generation Facilities in Romania
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Bucharest Bucharest Re
Reşşiiţţaa
F FÂÂNTNTÂÂNENELELE Bucharest Reşiţa FÂNTÂNELE COGEALAC COGEALAC COGEALAC Power sources wind hydro RE REŞŞIIŢŢAA
REŞIŢA
0 300 600 900 1,200
wind power plants hydro power plants 2013 2014 Total 1,255 1,256 5 90 1,250 1,166
Installed Capacity
CEZ Group companies in Romania had a total installed capacity of 622 MW as at December 31, 2014.
List of CEZ Group Power Plants in Romania
Hydro Power Plants—Reşiţa Site
Plant Owner Installed capacity (MW) Year
as at December 31, 2014 commissioned
Breazova TMK Hydroenergy Power S.R.L. 0.656 1977, renovated in 2013
Crainicel 1 TMK Hydroenergy Power S.R.L. 4.160 1950, renovated in 2013
Crainicel 2 TMK Hydroenergy Power S.R.L. 9.200 1997, renovated in 2013
Grebla TMK Hydroenergy Power S.R.L. 7.968 1970, renovated in 2013
Small hydro power plants, total 21.984
Wind Power Plants
Plant Owner Installed capacity (MW) Year
as at December 31, 2014 commissioned
Cogealac Ovidiu Development S.R.L. 252.5 2012
Fântânele Tomis Team S.R.L., M.W. Team Invest S.R.L. 347.5 2010
Wind power plants, total 600.0
Electricity Generation Outlook for 2015
We expect to generate 0.8 TWh of electricity in the Fântânele wind park and 0.5 TWh in the neighboring Cogealac park. The Reşiţa hydro plant system should generate 0.1 TWh of electricity.
Electricity Distribution
Electricity Distributed to End Customers in Romania (GWh)
CEZ Distributie S.A. distributed 6,316 GWh of electricity in 2014, which was a year-on-year decrease of 137 GWh. The main reason was lower electricity consumption by a major customer, a state-owned industrial enterprise.
Capital Construction
Capital expenditures on distribution in Romania were primarily aimed at improving the parameters of the distribution grid at all voltage levels in 2014. Their total value in 2014 was CZK 1.2bn.
Electricity Sales
Electricity Sold to End Customers Outside CEZ Group in Romania (GWh)
CEZ Vanzare S.A. sold 3,165 GWh of electricity to end customers in 2014, which was a year-on-year decrease of 201 GWh. The main reason was the fact that some customers, most notably the state-owned railway company CFR, switched to another