Utilities regulator criticises EC report on Slovakia

The Regulatory Office for Network Industries (ÚRSO) has repeatedly criticised the European Commission's report for 2015, which cites high network charges set by ÚRSO that the regulator claims are incorrect.

Jozef Holjenčík, chair of the Regulatory Office for Network Industries Jozef Holjenčík, chair of the Regulatory Office for Network Industries (Source: Sme)

“The report does not contain anything else but data and information that are chronically and notoriously known,” ÚRSO head Jozef Holjenčík said March 9, according to TASR newswire. “And right this is the bone of contention. This information and data is not correct; it was obtained from unknown sources.”

According to Holjenčík, Eurostat does not use a unified methodology for collection and processing of data.

It [Eurostat] often compares incomparable,” said Holjenčík as cited by the SITA newswire, adding that this leads to misrepresenting and deformed results.

Holjenčík sees as the core of the problem that network charges have not been jointly defined within the EU. While some understand the charges as only figures linked with costs for operation of grids and distribution networks. Others, and this is also the case of Slovakia, as everything what is included in the structure of the electricity price except costs of electricity as commodity. This means that the electricity price is final and does not contain any other items, which are paid separately in other countries, for example, in the form of special taxes.  

He also claims that his office has responded to all questions from the EC, but that they are not reflected in the report.

“High network charges set by the Regulator of Network Industries still hamper the competitiveness of Slovak companies,” the report published in late February reads.

The report continues that according to Eurostat data, network charges set by the regulator for both industry and households are among highest in the EU. Specifically, charges for industrial consumers were the second highest in the EU in absolute terms in 2013 and the third highest in terms of the proportion of the final electricity price (54.3 percent). Slovakia is one of three EU member states where network charges for industrial consumers are higher than energy supply costs. These findings are supported by a comparison of transmission tariffs carried out regularly by ENTSO-E which indicates that Slovak transmission tariffs for electricity are among the highest in the EU with only a subtle downward shift between 2013 and 2014.

“Key issues are the effect of regulated components on the end-price of electricity, in particular the subsidies for renewables and lignite, and high transmission and possibly also distribution tariffs,” reads the report. “The increase in network costs stems partly from the rise of levies to remunerate producers of renewable energy sources, from combined heat and power generation, as well as from environmentally harmful subsidies for domestically produced lignite (all these components are included in the network costs).”

According to Marián Kapec from electricity distribution company Západoslovenská Distribučná, Eurostat’s comparisons of network charges do not take into consideration different mechanisms of support for electricity generated from renewables.

“In Slovakia businesspeople as well as households pay the same charge for operation of the system,” Kapec told the vEnergetike.sk website dedicated to energy, explaining that this charge of €21.82 per MWH reflects support for electricity generated from renewables, highly efficient combined production of electricity and heat, production of electricity from local coal and costs of the market operator. But that there are also countries, in which support of renewable energy sources is fully or partially financed also from the state budget. There are also countries in which there are differences in charges for households and businesses to maintain competitiveness in industry. 

The representation of the EC in Slovakia explained that the EC obtains data for the report from objective and vertifiable data of Eurostat supplied by the Slovak Statistics Office as well as international data of ENTSO-E, the European network of transmission system operators for electricity, monitoring missions in Slovakia, contacts with representatives of the Slovakia’s state administration, analysts, media and others. Lívia Vašáková of the representation told ÚRSO representatives several times that they can consult data with the Slovak Statistics Office, TASR wrote. 

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