INSTALACIÓN DE LOS ELEMENTOS DE CAPTACIÓN, LOS EQUIPOS DE CABECERA, Y EL TENDIDO

The coal industry restructuring subsidy was introduced and is regulated by Government Decree No. 278 of 2007, effective January 1, 2008. It was reduced to its current value, 0.19 Ft/kWh, on 1 January 2011; back in 2010 and 2009, it was 0.23 Ft/kWh and 0.2 Ft/kWh, respectively. The appendix of the government decree provides information on the total amount of the subsidy in 2008-2010:

Year of payment Maximum value of payment

(Ft)

2008. 8 506 800 000

2009. 7 475 799 996

2010. 6 960 300 000

Total payments 2008-2010. 22 942 899 996

Table 11: The total value of coal cent subsidies received by Vértesi Erőmű Zrt.

Source: appendix of the Government Decree No. 278 of 2007

Government Decree No. 211 of 2011 (12 October) amends the above legislation and, in order to comply with EU legislation on state subsidies, lays down that the proceeds from the coal cent shall qualify as closure aid, the amount of which is calculated as the difference between the justified expenses of the coal mined by Vértesi Erőmű Zrt. or, more specifically, the justified expenses of the electric energy and heat energy generated from that source and the justified revenue from the sale thereof. As of 2011, the decree sets a maximum limit on the total amount of the subsidy for each year. For the two years 2011 and 2012, it is equal to the 2010 figure, i.e. 6,960,300,000 Ft, and then the cap shall be reduced to 5,220,225,000 Ft for 2013 and 2014. As of 2015, the closure aid is supposed to get terminated, or at least this is what the planned amount of 0 Ft for the years 2015-2018 implies.

The decree also includes rules on a special subsidy that is meant to cover the difference between the costs and the revenues from the closure of coal production units and hence unrelated to current energy production; which is, however, irrelevant to my analysis, as it is not a subsidy on current energy production.

I did not manage to find a source that would cite the exact sum total of the proceeds from the coal cents in 2011; its per unit of electricity (kWh) value did, however, not change during 2011, thus it can be taken to have been 0.19 Ft all year long. Each year, the MEH and MAVIR Zrt. publish a report titled „Statistical Data of the

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Hungarian Power System‖. The 2011 report contains data on the country’s annual net electricity consumption, which, by definition, corresponds to „gross domestic electricity consumption without the self-consumption of power plants, transmission, distribution and interconnection losses and transformer losses‖ (MEH, MAVIR, 2012. p. 9), that is, to the sum total of the amount sold to end consumers – which then again is the base for the coal cent. National net electricity consumption for 2011 was 36,358 GWh (MEH, MAVIR , 2012. p. 16.), thus accordingly, the sum total of the coal industry restructuring subsidy collected from consumers during 2011 amounts to 36,368 GWh * 0.19 Ft/kWh= 6,908,020,000 Ft, i.e. approximately 6.9 billion Ft. This value is rather close to the figure of 2010, as well, which is then again equal to the cap for 2011; I will hereafter use this value for 2011 in my calculations. The annual and the sustainability reports of the MVM group include electric energy sales data from Vértesi Erőmű Zrt. It must be taken into account that the power plant also employs biomass co-combustion, therefore part of the power it generates is sold under the KÁT scheme, as renewable energy. Therefore I need to filter out this portion of their production when calculating the per unit of production value of the coal cent subsidy, for it is not covered by the coal cents, but by the feed-in tariff, as is the case with other power plants. The data are, no doubt, accurate, given that the reports already provide the following breakdown of production volume:

„Electricity generated and sold;

of which: sale of electricity subject to mandatory purchase (KÁT)‖.

The difference of these two rows gives the annual volume of coal-generated electricity. The table below shows production data for the years 2008-2011:

Table 12: Electricity sales of Vértesi Erőmű Zrt.

Source: author‟s compilation based on MVM, 2012. p. 37. and MVM, 2010. p. 58.

By dividing the total amount of coal cents collected and redistributed each year by the respective annual volume of coal-generated electricity, as calculated above, I will arrive at the per unit of production value of the subsidy. Given that 1 GWh = 1000 MWh = 1,000,000 kWh, proceeds from the coal cent are given in million forints,

2008 2009 2010 2011

Electricity generated and sold, total in GWh 1 370 959 680 831

of which: sale of electricity subject to mandatory purchase, GWh 250 302 263 252

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therefore the result of the division million Ft/GWh will be in Ft/kWh; that is, I will arrive at the per unit of production (kWh) value of the subsidy, which the end consumers of electricity pay for each unit of fossil-generated electricity from Vértesi Erőmű Zrt.

2008 2009 2010 2011

sum total of coal cents (million Ft) 8 507 7 476 6 960 6 908

coal-generated electricity sold, GWh 1 120 657 417 579

per unit subsidy on coal-generated electricity production Ft/kWh 7.60 11.38 16.69 11.93

Table 13: Per unit subsidy on the coal-generated electricity production of Vértesi Erőmű Zrt.

Source: author‟s calculation

As we can see, by dividing the annual totals of these apparently negligible – as compared to other items on the electricity bill – 0.19 Ft/kWh items by the annual volumes of subsidized production, we arrive at rather striking per unit subsidy values. The subsidy started out at 7.6 Ft/kWh in 2008, increasing gradually through 2009 and 2010, mainly as a result of the drop in the volume of subsidized production; after all, the volume of coal-generated electricity in 2009 was only 59% of that in 2008, while the total amount of subsidy only dropped to 88% of the previous year’s value. The per unit subsidy took on its highest value of 16.69 Ft/kWh in 2010, once again a consequence of the volume of production having decreased more than the total amount of the subsidy. Considering 2011, the per unit value of the subsidy was, though somewhat less striking than in 2010, still rather significant at around 12 Ft/kWh.