Transcript Document
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The Illinois Commerce Commission (ICC)
and
The Energy Regulatory Office of Kosovo (ERO)
Partnership Activity
October 27 – 30, 2008 Prishtina, Republic of Kosovo
Sponsored by the
United States Agency for International Development (USAID) National Association of Regulatory Utility Commissioners (NARUC) Generation, transmission, distribution and supply tariffs in electricity sector in Kosovo, Rate setting based on specific power sector example in Kosovo
Theranda Beqiri Board Member
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Content
Legislative Hierarchy Tariff Design Criteria Tariff Calculation Basis Tariff Methodology – Revenue Cap Regulatory accounting statements Tariff Modelling Cost allocation procedure Calculation of tariffs Tariff Design Allowed Revenues by ERO for 2007 and 2008 Requested and Allowed Capital Expenditure for 2008 Energy flows summary Billed and Losses Main Indicators and Financial Flows in Electricity Market Building Block Tariff Developments in Energy Tariffs Future Activities
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Legislative Hierarchy
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Primary Law
1.
Law on Energy Nr. 2004/8- which involves: strategy, programs and balancing; energy efficiency, renewable sources of energy and co production; investments; economic regulatio of energy activities; competition in energy activites; restrictive measures on energy supply; the right of way and access to private land and supervision.
2.
Law on Electricity Nr.2004/10 – include: electricity system; generation of electricity; transmission of electricity; distribution of electricity; third party access; market organization; supply services; cross-border metering and accounting of electricity.
3.
Law on the Energy Regulator Nr. 2004/9- includes: organization of the Energy Regulators Office (ERO, ERO competencies; ERO funding, taxes; administrative procedures, licenses; building of new generation capacities; gas networks, direct electricity lines and direct pipelines; regulation of prices; unbundling and transparency of energy companies; mandatory public services; conditions for energy supply; bankruptcy of licensees; supervisions and punitive provisions.
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Tariff Design Criteria
Based on well-established & understood economic principles;
Ensure no discrimination or cross subsidy between customer groups;
Minimize complexity & associated costs including cost of metering and billing;
Tariffs should provide cost reflective price signals;
Enable protection of vulnerable customers
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Basis of Tariff Calculation
Tariff Constructed as a Building Block
Demand Forecast Generation Availability Generation & Mining Costs Imports Transmission Costs (Unbundled from KEK) Distribution Costs Supply Costs Loss Costs Depreciation (for assets past 2005) ***
Subsidies + Exports + Costs of unregulated customers are subtracted from allowed costs 6
Tariff Methodology – Revenue Cap
Allowed revenues are built up from ‘building blocks’
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KEK HQ allowed costs are allocated between other KEK businesses in proportion to their share of employee numbers;
•
An allowance for costs of losses purchases is added for KEK Distribution and KOSTT and for import purchases for KEK Supply
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Regulatory accounting statements
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A copy of the licensee’s most recent statutory accounts and accompanying auditor’s report and
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An auditor’s regulatory report on the regulatory accounts
The specific regulatory accounts items required are: 1. Cover 2. 3. Income statement Balance sheet 4. 5. 6. Cash flow statement Analysis of turnover Analysis of operating and maintenance costs 7. 8. Regulatory asset base (RAB) Capital expenditure 9. Depreciation 10. Additions 11. Major projects summary 12. Provisions
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KOSTT Data Submission TSO Model Output Review
Tariff Modelling
Standing Data
Data Review Data Review KEK Data Submission Output Review Supplier Model DSO Model
Tariffs
Output Review
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Cost allocation procedure Step 1: Definition of Cost
Cost Categories (e.g. cost for labour, material)
Cost Centres (places where cost occur, e.g. 110 kV network)
Products / Services (e.g. transmission services)
Step 2: Allocation of costs
to cost categories
from cost categories to cost centres (intermediate cost centre for common services)
from cost centres to customer categories
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Calculation of tariffs
The Revenue and Tariff Model calculates
Regulated retail tariffs TUOS, SO and MO charge DUOS charges An internal transfer price from KEK Mining to KEK Generation and from KEK Generation to KEK Supply is calculated
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Cost-reflective tariffs are calculated for each customer category, broken-down into
customer (standing) charges energy charges demand charges reactive power charges
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Tariff Design
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0 1 2 3 4 5 6 7 8
Category Tariff Design
110 kV/Industrial 35 kV/Industrial Fixed (Euro/year) Demand (euro/kW) Energy (euro/kWh) with time of day (high/low) and seasonal variation (high/low) Fixed (Euro/year) Demand (euro/kW) Energy (euro/kWh) with time of day (high/low) and seasonal variation (high/low) Reactive Power (euro/kvArh) 10 kV/Industrial Fixed (Euro/year) Demand (euro/kW) Energy (euro/kWh) with time of day (high/low) and seasonal variation (high/low) 0.4 kV / commercial large reactive power Reactive Power (euro/kvArh) Fixed (Euro/year) Demand (euro/kW) Energy (euro/kWh) with time of day (high/low) and seasonal variation (high/low) consumers 0.4 kV / Reactive Power (euro/kvArh) Fixed (Euro/year) commercial large Demand (euro/kW) non-reactive power consumers Energy (euro/kWh) with time of day (high/low) and seasonal variation (high/low) Household 2 rate meter Fixed (Euro/year) Energy (euro/kWh) with time of day (high/low) and seasonal variation (high/low) Household 1 rate Fixed (euro/year) meter Household no meter Public Lighting Energy (euro/kWh) with time of day (high/low) and seasonal variation (high/low) Fixed (Euro/year) Energy (euro/month) Fixed (Euro/year) Energy (euro/kWh)
Forecasted Energy Consumption% 2008
5.70% 1.51% 7.07% 5.54% 12.12% 56.81% 7.26% 3.65% 0.34%
Forecasted Allowed Revenues % 2008 Average Tariffs €/cent kVh 2008
3.96% 1.57% 8.37% 7.76% 19.34% 47.90% 7.50% 3.06% 0.53% 3.85
5.43
6.02
6.71
8.52
4.63
4.45
5.26
8.32
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Allowed Revenues by ERO for 2007 and 2008
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Non-KE K Power Purchas e Cos ts KE K Mining KE K Generation KE K Dis tribution (exc. los s es purchas es ) KE K S upply (exc. power purchas e cos ts ) KOS TT (exc. los s es purchas es )
Total allowed revenues
Import s ubs idies E xport revenues Revenues from s ales to eligible cus tomers
Total allowed revenues recovered from regulated customers
S ales to regulated cus tomers
Average regulated unit cost
000 € 000 € 000 € 000 € 000 € 000 €
000 €
000 € 000 € 000 €
000 €
GWh
€c/kWh 2007 Allowed
46,316.1
42,150.8
38,047.5
16,843.5
6,008.9
8,635.3
158,002.1
9,872.9
2,765.1
10,329.5
135,034.6
2,699.7
5.00
2008 Allowed
50,584.7
44,102.4
41,500.2
23,197.9
2,949.5
9,403.8
171,738.6
19,800.0
1,461.9
19,150.7
131,326.0
2,564.5
5.12
a) Imports + Energy Purchase costs from HPP Ujmani and Distribution-Embedded Generation 13
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Requested and Allowed Capital Expenditure for 2008
Requested KCB allocated Grant Loan Total Allowed Notes KEK
Mining Generation Distribution Supply HQ
Total KOSTT Total
92,800,000 24,100,000 31,140,100 1,153,400 2,883,500 22,800,000 6,000,000 9,200,000 0 0 70,000,000 9,400,000 0 0 0 Other Resource
38,468,700 15,519,300 19,165,000
92,800,000 15,400,000 9,200,000
152,077,000 38,000,000 79,400,000 117,400,000 34,684,300
0 0 92,800,000 15,400,000 19,200,000
Allowed includes meters (€10 million)
0 0
127,400,000 34,684,300
Difference between allowed and KCB allocated represents committed grants from
Adjustments are applied for:
o unpaid subsidies included in allowed revenues in the preceding year o capex underspend relative to allowed levels in the preceding year
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Energy flows summary
Imports
Average c os t (c ontrac ted imports )
KE K generation
Average c os t (inc luding mining c os ts )
Kos ovo trans mis s ion-connected generation
Average c os t
Kos ovo dis tribution-connected generation
Average c os t
Total supplies
A verage cost
Trans mis s ion los s es
of whic h, trans mis s ion los s es on trans it flows
Dis tribution los s es Internal cons umption E xports S ales to eligible cus tomers (F eronikeli) S ales to 110kV cus tomers S ales to dis tribution-connected cus tomers
Total sales to regulated customers
GW h
€c /k W h
GW h
€c /k W h
GW h
€c /k W h
GW h
€c /k W h
GWh
€c/k Wh
GW h
GW h
GW h GW h GW h GW h GW h GW h
GWh 2007 Allowed
57 6.6
7 .40
3,942.0
2.03
113.0
2.13
41.3
3.00
4,672.8
2.71
169.9
3.7 % -31.0
1,382.8
35.0%
0.0
92.2
359.2
131.6
2,568.1
2,699.7
2008 Allowed
458.1
10.40
4,407 .3
1.94
7 6.0
2.40
28.0
4.00
4,969.4
2.74
194.5
3.9% -31.0
1,444.7
37 .4%
100.0
33.0
663.6
146.3
2,418.2
2,564.5
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Billed and Losses
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Energy Billed and Lost
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Losses, 46% Billed, 54% Losses, 36% Billed, 64% 2007 2008
Years
The collection rate is unsatisfactory as last year it reached 75% Losses Billed
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Main Indicators and Financial Flows in Electricity Market
Transmission KEK Generation Distribution Embedded Generation, HPP Ujmani Distribution PUBLIC SUPPLIER Import Export Traders Non-Eligible Customers Ferronikeli, Sharrcem Eligible Customers Kosovo Consolidated Budget
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Developments in Tariff Process
• Regulated Tariff review period is set for 3 years from 2007-2009 • The first regulated tariffs were approved by the board of ERO on 31.05.2007
• The second regulated tariffs were approved by the board of ERO on 27.06.2008
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• The regulated tariff of 2008 is on average 5% higher than that of 2007.
• Tariffs were calculated intending the gradual elimination of cross-subsidies between different tariff groups during the tariff review period.
• ERO is currently in the process of analysis of Feed-In tariffs for small Hydro Power Plants and reviewing the tariffs of district heating for the season 2008 2009.
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Future Activities
The district heating tariff for the 2008-2009 season will be approved by the end of October 2008.
The Electricity Tariff review for the 2009 season will begin in November 2008.
The development of secondary legislation in the PTD, foreseen for 2009: The development of the Tariff Methodology for Electricity produced from Renewable Resources The development of the Tariff Methodology for district heating
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Thank You!
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