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15th ERRA Energy Investment and Regulation Conference
October 17-18 2016, Bratislava, Slovakia

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PRICE REGULATION

Frequently asked questions

  • What does the term “overcapacity/excessive power” mean?
    Overcapacity is billed to all transmission system users, distribution system users connected to medium and low voltage that have their delivered capacity metered and to customers at low voltage that have their delivered capacity metered. It represents the positive difference when one subtracts the approved maximum capacity which a customer demanded at the moment his facility was connected to the system from the metered maximum capacity. This difference is paid at four times higher price than the price for approved capacity for transmission and distribution system users, i.e. twice as high as the price for billing capacity for electricity customers. Metered capacity may be reduced if a customer manages his consumption, i.e. he switches electrical appliances at different time. If a customer cannot reduce the capacity, he may require an increase in approved capacity.
  • What does the term “excessive reactive power” mean?
    Excessive reactive power is billed to all transmission system users, distribution system users connected to medium and low voltage that have their reactive power metered and to customers connected to low voltage that have their reactive power metered. It represents the positive difference when one subtracts the reactive power which corresponds to the power factor cos(fi) =0.95 from the metered reactive power. This power is paid at twice as high a price than the price of reactive power. Reactive power consumption can be reduced by the installement of relevan compensation devices.
  • What does the term “public supplier cost” mean and what will that money source be used for?
    Public supplier cost represents a tariff which is paid in the same amount every month for each delivery point, i.e. meter. This is not an additional cost imposed to a customer. Supplier’s costs are allocated to this tariff elemetn. Supplier uses these means to finance the costs arising from his operations with customers (contract conclusion, billing, printing and sending bills, call center, etc.). For this reason, this item is billed even during those months when electricity was not consumed.
  • Does a customer bear losses if the billing period is longer or shorter than 30 days?
    The number of kilowatthours in consumption zones (green, blue and red) is set for the 30-day period – it means that the standard number of days in a month amounts to 30. If more or less than 30 days passed between two billings, the customer will not bear any losses because the number of kilowatthours in every zone will be recalculated proportionally to the number of the days of the billing period in the following manner: number of days of the billing period/30 X zone limit. Thereby, zone limits are proportionally modified on a daily basis by 11.67 kWh (green), i.e. by 53.33 kWh (blue). The realised ratio between the consumption in higher and lower tariff is sustained within the zones in total consumption.
  • What does the term “billing capacity” stand for?
    It represents a tarif for customers for electricity billing in line with the tariff element “active capacity”. For customers included in Mass Consumption Category (which also includes Households), this tariff is applicable to approved capacity, as the highest one-time capacity of appartment/house appliances which have been switched on. For other customers, this tariff is applicable to metered amounts of maximum active capacity of connected facilities, up to the level of amount approved at the time of connection. The capacity that has been overused is billed to those customers in line with the tariff “overcapacity”.
  • How and why do customers-households pay “billing capacity”?
    Billing capacity is paid every month and it is calculated by multiplying the approved capacity (kilowatts) with the “billing capacity” tariff. Being connected to the system, a customer has reserved (has leased) certain capacity which has been approved to him and this is how he has a guaranteed right to have that capacity available to him at any time regardless of the consumption level. This is why billing capacity is invoiced even during those months when an electricity customer’s consumption amounted to 0.
  • Why isn’t the tariff system simpler and why different tariffs are included in it which make it more complicated?
    The application of a simple tariff system which is based on the so-called simple kilowatt tariff which is often advocated (one would pay only RSD/kWh) would mean that total costs are allocated only to this tariff element and the power tariff would be increased by averade in order to provide the same level of necessary profit for the energy entity and a justified profit as well. However, it would lead to unfair reallocation of costs between customers. For example, customers with balanced consumption would have their bill increased with no justification, while those customers who have unbalanced consumption would pay much less for the energy than the actual costs they produce by their unbalanced consumption (in order to cover their demand, additional capacities in power plants and networks need to be constructed and maintained). The most striking example would be summer houses where during most of the months of the year, owners would not pay anything, although the network was constructed in order to cover the demand of those houses as well; there are fixed costs of that network (maintenance and depreciation), while the guaranteed supplier bears costs no matter whether electricity is consumed or not. Tariff elements for capacity and the compensation for delivery point are the elements which create conditions for more fair allocation of system costs to customers.
  • Why are there consumption zones?
    The introduction of three consumption zones, the green, blue and red one is justified by the idea to stimulate more rational use of electricityci, since, thereby, unbalanced consumption of more expensive electricity for the purpose of e.g. heating is fairly billed to those customers who use electricity precisely for theses purposes. The price of green block energy is the lowest one, since the costs of this electricity would be lowest if all households would use electricity only for their basic needs. This consumption is balanced in terms of season and it asks for the drastically cheapest production, while the transmission and distribution sytem would be dimensioned in line with summer consumption and they would be used to their optimum during the whole year. On the other side, it takes the most expensive capacities to produce the electricity from the red block or to import electricity during the short winter period when its price reaches the highest level. In that case, transmission and distribution systems are dimensioned in line with winter consumption which also causes higher system costs.
  • Does any other country uses block tariff?
    In a great number of countries, in order to stimulate rational consumption, there is block tariff (USA, Japan, South African Republic, Australia and many European countries). It represents a modern tariff method which is aimed at the increase in energy efficiency, i.e. reduction of electricity consumption. The blocks which are used for electricity billing can be introduced both for energy and for the capacity, depending on the structure and availability of generation capacities, i.e. energy sources they use.
  • Will the customers-households be able to pay one billing capacity at one period of the year and different one during other periods of the year (e.g. if they are absent from their home for several months, summer house owners, etc.)?
    Capacity is set in line with the capacity approved by connection approval. This capacity is available to a customer at any time and this is why it is a fixed cost paid every month. Even if electricity is not consumed (customers leave their house for several month, summer houses, etc.), customer pays the relevant capacity. Only if a customer, in line with the law, cancels the meter in a timely manner (he demands for delivery abruption), he will not pay for the capacity. The abruption may be done for a period of at least one year and two years at most.
  • How can a customer – household find his connection approval document and see which capacity was allowed in his case?
    Approved capacity is visible in the bill, in line with the records of the power distribution company. In line with the Decree on Conditions of Electricity Delivery and Supply, for the facilities with three-phase- system which do not have their approved capacity, it is considered that their approved capacity amounts to 17.25 kW (complementary with 25A fuses).
  • Can a customer – household as for a change in approved capacity?
    Approved capacity can be changed based on a decision adopted by an electricity distribution company. A customer may file an application with an electricity distribution company requesting the replacement of the main melting fuses by automatic fuses or the replacement of existing automatic fuses with automatic ones which correspond to the capacity requested by the customer. Only then the capacity will be billed in line with the installed fuse. The costs of the change are borne by the customer.
  • Who files an application for the decrease or increase of capacity?
    An application may be filed only by a person who was awarded with the connection approval, i.e. the owner or user of the facility connected to the system, i.e. a person who has concluded a contract on electricity sales. In case of a Households Customer Group, this would be the person whose name is on the electricity bill.
  • How can a customer – household determine the level of capacity he needs?
    The capacity is calculated by summing up individual capacity of electrical home appliances which will be swiched on at the same time. When deciding on the level of necessary capacity, a customer needs to determine the capacity of all bigger electrical home appliances as well as to take into account which one of those need to be switched on at the same time.
  • What is the capacity of electrical home appliances ?

    Electrical appliances

    Capacity (in kW)

    refrigerator and freezer

    0.3 - 1

    single burner hot plate

    0.6 - 2

    mini water heater (kitchen)

    up to 2

    big water heater (bathroom)

    up to 2.5

    tankless instantaneous water heater

    6 - 18

    dishwasher

    2

    washing machine

    2

    air-conditioner

    0.8 – 2.7

    electric thermal storage heaters

    2.2 - 6

    electric boilers for heating purposes

    12 - 36

    Оther (ТV, radio, computer, bulbs)

    in total 1-2

  • What is the role of automatic fuses in the enforcement of new regulations?
    Automatic fuses serve to limit the capacity to the level approved to the customer and to protect the network from failure of electrical appliances or home electrical installations.
  • Who will check if a customer had the fuses adequate to his approved capacity installed?
    Electricity distribution company checks if the installed fuses correspond to the approved capacity.
  • Who sets the level of costs of connection to the electricity transmission or distribution system?
    The level of costs of connection to the electricity transmission or distribution system is set by the energy entity performing electricity transmission or distribution in line with the methodology for setting connection costs which is adopted by the Energy Agency of the Republic of Serbia.
  • What does the cost of connection to the electricity transmission/distribution system include?
    The cost of connection to the electricity transmission/distribution system includes the costs of equipment, devices and material, works, project design, gathering necessary documents and a part of costs for network development arising due to facility connection, depending on the approved capacity.
  • Who can I file an appeal with against the Decesion on the Approval of the Connection to the Electricity Transmission/Distribution System?
    One can file an appeal against the Decision on the Approval of the Connection to the Electricity Transmission/Distribution System to the Energy Agnecy of the Republic of Serbia 15 days upon the receipt of the Decision. The decision of the Agency is final and one can launch administrative proceedings against the decision.
  • What are the different types of connections?
    Depending on complexity and technical conditions for the connection of a facility to the transmission/distribution network, the type of a facility and the distance between it and the system, connections are classified into standard ones and single/individual ones. For a standard connection, in line with technical conditions, there is a standard design and average costs for its construction. On the other hand, for a single connection, there is a unique technical design and an actual cost of connection. Single and group standard connection are defined in line with the place where the switching board will be placed, necessary connection capacity, number of phases and type of network (overhead or cable) to which a customer is being connected. Group standard connection is also defined in line with the number of metering devices and the purpose of consumption (heating included or not).
  • Who is obliged to unbundle books of account and what is the purpose of it?
    The obligation of splitting books of account is imposed on energy entities which perform one or more than one energy activity with regulated prices or for those entities which, apart from performing energy-wise activities, perform another either energy-wise or non-energy-wise activity which, in line with the Energy Law (“Official Gazette of RS”, No. 145/2014), is not considered to be an energy activity. The obligation is prescribed by Article 18 of the Energy Law (Artigle 18, paragraphs 1 and 2: “In order to avoid discrimination, mutual subsidising and competition disruption, an energy entity which perfoms one or more than one energy activity at regulated prices or which, apart from those energy entities, performs other energy-wise activities or other activities which are not considered as energy entities in line with this Law, is obliged to keep different accounts for each regulated energy activity within its internal accounting procedures, including electricity supply at regulated prices and collectively for other activities which are not considered to be energy activities in line with this Law and to make an annual balance sheet and profit and loss account for each activity separately, in line with this Law as well as with the law regulating the field of companies and the law regulating accounting and audit. An energy entity referred to in paragraph 1 hereof which is obliged to have an audit of annual financial reports in line with the law is obliged to provide an audit of annual financial reports which should confirm the compliance with the principles of avoidance of discrimination and mutual subsidising.” Article 389 of the Energy Law prescribes that an energy entity, i.e. another legal person will be penalised in the amount of RSD 1,500,000 – 3,000,000 for an economic offence if it does not keep separate accounts for each energy activity in line with this Law, it does not elaborate an annual balance sheet and profit and loss account and does not provide an audit of it, in line with the Article 18 of the Law. The same Article also prescribes a penalty for economic offence of RSD 100,000 – 200,000 for an authorised person working for the energy entity, i.e. another legal person.



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