Richard Sulík: What is it really like with electricity prices – PRAVDA.sk

1. The shareholders of Slovenské elektrárni a.s. are the Italian ENEL (33%), the Czech EPH (33%) and the Slovak Republic (34%), EPH has managerial control, ENEL is responsible for the completion of Mochoviec. ENEL and EPH are not shareholders directly, but through the company SPH (each has 50% in it and SPH owns 66% of the shares of SE as). Read more Will we produce electricity for 50 euros and buy it for 1000 euros? How is this possible, what is happening? 2. On February 10, 2022, I agreed with ENEL’s vice president, Simon Mor, that the price of electricity for households would remain at €61.20/MWh for the years 2023 and 2024. I tried to make this agreement in time enough so that SE and sell electricity to others. For comparison: today electricity on the exchange costs more than €600/MWh, i.e. ten times (!) the agreed amount. Regardless of the final price of electricity in 2023, we saved households (540 × 5.355) = 2.892 billion with this measure alone. €, i.e. almost three billion euros, that’s more than 100 euros a month! 3. A few days later, we publicly signed a non-binding memorandum that guarantees us 6.15 TWh at a price of €61.20 per MWh. For info: 1 terawatt-hour (TWh) = 1 million megawatt-hours (MWh) 1 megawatt-hour (MWh) = 1,000 kilowatt-hours (kWh) 4. Household consumption increases every year (and therefore it is possible and right to expect savings) and for 2023 the ÚRSO is -m estimated at 6.3 TWh. With approximately 2.4 million households, the average consumption of one household is approximately 2,600 kilowatt hours (ie 2.6 MWh) per year. 5. In times of a serious energy crisis, everyone has to contribute, and therefore it is right to expect a saving of 15% from every household (with the exception of a relatively small number of households that are already 15% below the average consumption in the band, i.e. those who already significantly save; this percentage must be precisely determined). 6. For households, we therefore need (6.3 × 0.85) = 5.355 TWh, and from the agreed amount of 6.15 TWh, (6.15 – 5.355) = 0.795 TWh remains, which we will use for losses arising during electricity transmission. Read more The power plants have started loading fuel into the third reactor in Mochovce 7. The estimated losses in the entire low-voltage segment (220 Volts) are at the level of 1.1 TWh, of which households accounted for 70%, so the losses attributable to households are (1.1 × 0 .7) = 0.77 TWh, we have a reserve of 0.025 TWh from the amount specified in point 6. 8. Costs will also arise for the so-called diagram. The point is that SE as will supply the agreed 6.15 TWh per year in the “baseload” mode, i.e. in an absolutely even manner. Every day it will be exactly (6.15 : 365) = 0.01685 TWh = 16,850 MWh (see point 3) and every hour (16,850 : 24) = 702 MWh. In other words, SE as will make available to households a “base load” of 702 MW (not MWh, because it is a permanent power of 702 megawatts, which is available 24 hours a day, 365 days a year). 9. However, household consumption is not the same every moment. At seven in the morning in winter, when households are on and using hot water heated by an electric boiler, the consumption is significantly higher than in summer at four in the morning, when everyone is asleep. This fluctuating household consumption is called a diagram. 10. Of course, changing the baseload to the diagram costs something and someone has to do it. This will be done by an “agent” and will cost 10% of the price. The agent is a company that buys all 6.15 TWh from SE as for 61.2 €/MWh as baseload and sells them to individual traders (of which there are about 30, the largest of which are ZSE, SSE, VSE, SPP) already as a diagram in 10% higher price. It has already been decided that the agent will be a 100% state-owned enterprise SPP and that it will cost 10% of the price of electricity, it has already been agreed with SPP. 11. Let’s go to the total price of electricity. It consists of the following six items, listed with prices per MWh this year: Electricity supply (commodity, diagram, deviation, profit) €79.62 Distribution and transmission, including losses €53.15 Tariff for system services (TSS) 6 .30 € Tariff for the operation of the system (TPS) €15.90 Levy to the National Nuclear Fund (NJF) €3.27 Value added tax (VAT) in the amount of 20% €31.65 Today, each household pays a total of €189.89 for MWh, rounded to 19 cents per kWh. It is an average price for households, due to the fact that each seller has a certain number of tariff groups (5 to 9) according to the amount and type of subscription. 12. For the first item “Electricity supply”, the price of the commodity itself is €61.2, the diagram is 10% (however, here for some reason from a slightly higher price), a deviation of about €4 and a reasonable profit, a total of €79.62. This price will increase next year to €83.83. Although the diagram will become slightly cheaper, the price for this item will rise to €83.83 due to a significantly higher deviation. I took this amount from the working document of Andrej Juris, the chairman of ÚRSO. 13. The second item is the price for distribution, including losses. Today’s €53.15 includes €13.32 in losses, according to ÚRSO. This item drops to €10.65 in the case of using cheap electricity (see point 7) according to ÚRSO. The calculation is as follows: for all losses, 0.770 TWh is needed, which will cost a total of (0.77 × 1,000,000 × 61.2) = €47.124 million, and this is divided by the consumed 5.355 TWh, that is €8.80. As mentioned above, ÚRSO calculates with a price of €10.65, when using this price the price for distribution and transmission, including losses, will drop from €53.15 to €50.49. 14. The third item is the tariff for system services (TSS), it is used to finance backup sources that supply electricity if one of the main sources fails. Backup sources can be anything from a diesel generator to an agreement with a large electricity consumer to shut down production if a source fails. There are a total of 12 different types of these sources and they ensure that the amount of electricity in the required voltage and frequency is exactly what is needed in the network. This year, TSS costs €6.30 per MWh of consumption, but this price will increase, but it is not known where exactly. It will certainly be an increase in multiples, but a lot depends on how well SEPS procures these resources. By the way, SEPS belongs to the MoF. 15. Another item is the tariff for the operation of the system (TPS), which subsidizes renewable sources of electricity (RES) and high-efficiency combined production of electricity and heat (VÝKVET). This item will drop from today’s €15.90 per MWh to €11.14. The decrease is logical, because with the high price of electricity, its support decreases. Both numbers were set by ÚRSO. 16. The levy to the National Nuclear Fund (NJF) is €3.27 and will not change. VAT remains the same for next year in the amount of 20%. 17. After taking points 12 to 16 into account, the following total price for 2023 results: Electricity supply (commodity, diagram, deviation, profit) €83.83 Distribution and transmission, including losses €50.49 Tariff for system services (TSS) ? € Tariff for system operation (TPS) €11.14 Levy to the National Nuclear Fund (NJF) €3.27 Value added tax (VAT) in the amount of 20% €29.75 The final price including VAT is €178.47 in total, however, it is necessary to add TSS. Today it is €6.30/MWh and it will rise significantly, according to the ÚRSO estimate, it can be up to 6 times. However, as stated in point 14, a lot depends on the skill of the TSS procurers, that is, SEPS. 18. All these numbers either come from Andrej Juris, the chairman of ÚRSO, or I edited them together with him (item b). The difference compared to the figures published yesterday is mainly due to the fact that, while I count on the fact that the electricity for the losses will come from cheap energy from SE as (points 7 and 13), he counts e.g. Minister of Social Affairs Milan Krajniak with the market price of electricity for losses. Then the item bv point 17 is not 50.49 but 102.46 € and together with TSS it can be (178.47 + 37.80 + (102.46 – 50.49)) = 268 € per MWh. This price was originally included in ÚRSO’s internal estimates, because they did not have information about covering losses from cheap energy and assumed that the electricity needed to cover losses would be purchased at current market prices. 19. However, as I wrote above, the TSS item must be proposed by SEPS belonging to the Ministry of Finance of the Slovak Republic. Distribution including losses will not be 102.46, but only 50.49, because it will be possible to use the electricity agreed in the memorandum at a price of €61.2/MWh for losses. 20. Therefore, I repeat that the probable final price for households (the final price will be only after the end of the regulatory processes in the fall) per MWh will be €178.47 + TSS. I write “probably” because these are all just estimates (albeit as realistic as possible) and the final price will be determined only after the end of the regulatory process. I fully understand that both Matovič and Krajniak are now comfortable scaring people with high prices. Subsequently, they will do it exactly as I write in this material and will present themselves as saviors. However, it is neither correct nor true.