BALTIC ELECTRICITY MARKET MINIFORA

Riga 3 July 2006

Transmission and connection to the grids

Dace BitePublic Utilities Commission

May 2005 Parliament adopted Electricity market Law

• PUC in accordance with the law accepted:– regulation on consumer and producer access to

electricity system;– electricity transmission, distribution and supply tariff

calculation methodologies;– regulations on publication of financial information– regulations on minimal requirements to TSO

independence– regulations about information of electricity

consummers

Methodologies for tariff setting

• The duration of the tariff review cycle is three years. The regulator may adopt a decision on the extension of the tariff review cycle if the tariff of the next tariff review cycle has not been approved at the end of the tariff review cycle.

• When setting the base tariff the regulator shall perform cost and profit analysis and assessment.

• Two interrelated activities included in this methodology constitute the basis of tariff setting:

– setting economically justified base tariffs for the base year of the tariff review cycle,

– setting tariff ceiling for each year of the tariff review cycleo The regulated enterprise shall apply the cost allocation model,

following approval of its basic principles, specification and introduction by the regulator. The cost allocation model shall be comprehensive.

Cost allocation principles

Costs are divided into two groups:

• costs related to electricity transmission

• costs related to system maintenance and development and are necessary to provide functioning and safety of the system and supply of certain capacity to users regardless of quantity of transmitted electricity

System operator’s costs ( I

P

)

Service:Electricity

transmission( I

eelk

)

Service:Capacity supplyand maintenance

( Ijaud

)

Cost divisionusing operational

capacity coefficients

Costs related toelectricity

transmission

Costs related tonetworkcapacity

maintenance

Costs related tofulfillment ofboth services

Aproximately transmission charges in EU year 2004

0

10

20

30

40

50

60

70

80

EU

RO

/MW

h

large users

low voltage commercial

low voltage households

Electricity prices for households and industry In EU, Norway and Bulgaria 1st July 2005

0,00

2,00

4,00

6,00

8,00

10,00

12,00

14,00

16,00

E

U-

25

E

U-

15

BE CZ DKDE EE EL ES FR IE IT CY LV LT LU HUMT NL AT PL PT SI SK FI SE UKBGHRRONO

Eu

ro/1

00 k

Wh

Connection rules for consumers

• 40% of costs of new connection - consumer • 60% of costs of new connection - system operator, costs are

included in tariff calculations• Costs of connection to the 110 kV and higher voltages grid is fully

covered by the consumer• The assets of new connection belongs to system operator• The special connection to the transmission grid:

– 100 000 MWh in a year or capacity not less then 50MW - 66% of costs are covered by consumer

– The special connection to the transmission grid:– 150 000 MWh in a year or capacity not less then 75MW -

33% of costs are covered by consumer– The special connection to the transmission grid:– 200 000 MWh in a year or capacity not less then 100MW - all

the costs are covered by TSO

Connection rules for electricity producers

• All the costs are covered by producer• If the building is done by SO the tender should

be realized• 45 days before connection the producer

informs SO about the readiness to start the inspection

• The costs of inspection is covered by system operator

• After the inspection is successfully compleated the next day electricity producer should be connected to the system

THANK YOU FOR ATTENTION

Web page of PUC : WWW.SPRK.GOV.LV