Wednesday, July 28, 2010

Market liberalisation will allow under better conditions

After restructuring of Slovenske elektrarne, a.s. (SE), the new company Slovak Electricity Transmission System (Slovenska elektrizacna prenosova sustava, a.s.), (thereinafter SEPS) has been established. As the only one out of the separated branches is not considered for privatisation and will remain 100 % state-owned. Richard Kvasnovsky interviewed the Director General of SEPS Alexander KSINAN about visions and goals of the company within the Slovak power industry.

What is the position of SEPS after separation from the mother company SE?
SEPS has been registered on January 21, 2002 by a recording in the Commercial Register of the Slovak Republic. SEPS acts as the transmission system operator and ensures electricity transmission through 400 and 220 kV lines on the territory of Slovakia, as well as electricity import, export, and transit. The company mission is to ensure a reliable electricity supplies to customers, maintenance, renewal, and development of the transmission system equipment, dispatching control on the territory of Slovakia, and co-ordination of the system control within internationally connected system. SEPS provides transmission and system services to its customers, i.e. electricity generation and distribution companies, customers connected to the transmission system, as well as importers, exporters, and transit companies on a contractual basis, while applying tariffs agreed by the Regulatory Office for Network Industries. SEPS has been appointed by the Ministry of Economy as the temporary market operator.

Is SEPS as a part of the Slovak power industry also planned for privatisation?
SEPS, as per the Act No. 92/1991 Coll. on conditions of the national property transfer to other entities, as amended by later regulations, has a character of a natural monopoly with assets owned by the National Property Fund of the Slovak Republic. SEPS privatization is not considered at present, and as declared by competent national bodies, privatisation is not considered in the intermediate-term of the next five or six years either.

SEPS has long been trying to implement the project of 400 kV line construction between Austria and Slovakia. What is preventing from the project implementation and what is its importance for the country?
Intensive negotiation about preparation of the 400 kV interconnection between Slovakia and Austria (Stupava - Vienna) started in 1990. CEZ (Czech Republic) suggested a competitive alternative of strengthening the Austrian interconnection with the East European systems by installation of the second 400 kV line (Slavetice - Dürnrohr) with lower costs. The Austrian, however, preferred the connection from Stupava to Vienna in order to increase operational safety of the Austrian system interconnection in the east-west direction. The line should have been commenced before CENTREL integration with UCTE and the line was to be connected to a Vienna-South station that would allow for a direct commercial co-operation of the Slovak transmission system with UCTE system even in case of asynchronous operation. The line was designed from Stupava to the state border in the area of the settlements Zahorska Bystrica - Angern. The bilateral efforts were topped with signing the contract between SEP and ÖVG on December 21, 1993. The contract was also co-signed by the Czech party (Director General of CEZ, Mr Karas) due to 2 x 220 kV line Sokolnice - Bisamberg. Both parties started with the construction preparation on their territories. In 1995 the works were stopped in Austria, for the Mochovce NPP completion and Bohunice V-1 NPP (electricity exports to Austria) were made political issues. The last negotiation between ÖVG and SE was held in Austria in May 29, 1995. It was declared at the meeting that the contract is still valid. However, based on the political reasons, which might endanger further existence of the signed contract for the transmission line construction, the Austrians demanded discontinuance of the construction preparation. It was assumed that the situation might be better after Mochovce NPP commissioning. In October 1995 the Austrians requested SE that the Slovak party should not insist on the approval process on the Stupava - Bisamberg line, since it might endanger other transmission line projects in Austria, particularly the construction of 400 kV line Vienna Southeast -Kainachtal. SE asked ÖVG a few times to bring the project back to life, and after SEPS the company management contacted Verbund company with the aim to continue in construction as soon as possible. It was agreed at a meeting held in Vienna on April 8, 2002 that the project shall continue at the level of a joint expert group. The 400 kV cross-border connection Stupava - Vienna Southeast remains a priority in the development of the Slovak transmission system. With the parallel operation of CENTREL and UCTE the line has a transmission capacity similar to the one Györ-Wien Southeast and will be the only direct interconnection of the Slovak transmission system with western systems. The interconnection is assumed to be used for the following purposes:

* direct electricity exchanges and export/import
* mutual emergency aid
* electricity transit in favour of contractual and third parties
* electricity exchanges to reduce negative environmental impacts of power plants
* increased reliability of the both power systems operated within UCTE.

New technical possibilities of transmission at the east of CENTREL systems will increase the capacity of transits from the north and east to Austria. The east of CENTREL systems currently represents the UCTE operation border, where the system is connected to the IPS/UPS system of the Union of independent states. Only a small, limited volume of electricity can be transmitted through the present border between eastern and western systems. Slovak and Polish power industries have jointly erected a double 400 kV connection Lemesany - Krosno to increase the capacity.

A few days ago you have been appointed the Vice-president of UCTE, the Union for the Co-ordination of Transmission of Electricity. What’s the main objective of the organisation and what’ the position of Slovakia in it?
UCTE is an association of 35 transmission system operators from 21 countries of the continental Europe, which provides a reliable market basis through effective and safe “electrical highways”. The synchronously interconnected system meets technical conditions for a reliable operation and is useful for all market participants, since the system guarantees access to the market. More than 50 UCTE has been co-ordinating - through various technical rules and recommendations - an international operation of extra-high and ultra-high voltage grids, which work at so-called one “heart rhythm” at the frequency of 50 Hz. UCTE is in charge of the development of the system so as to meet all new market requirements with no loss in relation to reliability and safety of the existing system. UCTE grid allows for safe electricity supplies for population of more than 400 million. It means that UCTE co-ordinates one of the largest synchronously interconnected systems on the globe. I can mention a few characteristics for illustration to confirm the fact: installed capacity of 512 GW, electricity consumption in 2001 amounted to 2160 TWh, total sum of electricity exchanges among members according to UCTE rules 230 TWh, total length of transmission lines controlled by UCTE is 200 000 km. UCTE is convinced that reliability of the largest European electrical synchronous interconnected area and development of stable conditions for flourishing electricity markets in the area are mutually related.
Slovakia is represented in UCTE through SEPS, which has been a fully-fledged member since May 17, 2001 with all rights and duties arising from the membership. The duties are the following:

* responsibility for safety of the whole UCTE system, i.e. system ability to withstand major or sudden failures such as trip of generation units, grid elements, as well as accidents due to calamities
* UCTE system adequacy, that is a structural ability of the system to ensure an even balance between the electricity generation and consumption
* each UCTE member is responsible for his own transmission system quality, and jointly with the others maintains a high technical level that is the basic presumption for market development
* quality assurance of international transmission services and early warning in case of reduced generation or transmission capacities that might lead to sudden limitations or adverse effects on competitive electricity markets.

What effects can be expected by consumers with approaching electricity market liberalisation?
Electricity market liberalisation will allow for electricity supplier selection, at first for large customers, whose consumption is higher or equal to a level set by a regulation of the Ministry of Economy, hence the customers can buy electricity under better conditions. In the next step, in line with the market liberalisation schedule, the supplier will be selected also by customers with lower electricity consumption, including households that might result in lower prices, as well as improved services related to electricity supplies. In the end the electricity price will be modified so as to express the actual value at various voltage levels. One of the possibilities how to provide comprehensive service to customers with the best price is the comprehensiveness of electricity delivery combined with other products, i.e. gas, water, or telecommunication services (data transmission, internet connection) respectively.

What are the future SEPS tasks in relation with integration of Slovakia in the European Union?
Firstly it is essential to get a full membership in the Association of the European Transmission System Operators (ETSO), where SEPS obtained an associated membership on January 1, 2002. ETSO is an association dealing with the economic agenda of the transmission system operators, and for Slovakia the questions of cross-border transmission tariffs and solution of so-called electricity transmission narrow points will be certainly important. The next task is the need of active involvement in the liberalised power environment formation in Europe, as well as to be a trustworthy and hot partner in the European electricity market. Other permanent basic tasks in the future will include ensuring a reliable and safe operation of international transmission system interconnections from the synchronous area as the basic assumption for trouble-free electricity exchanges by ensuring the domestic as well as cross-border non-discriminating access to grids.


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