Extended Essay

Further problems arise: the gas company is foreign so it brings the abnormal profit out from Hungary; it just invests a really small part of its profit in storage.

These struggles were apparent with the macroeconomic disequilibriumat the same time: the budget deficit was high (in 2006 it reached 9.3% of the nominal GDP) and the policies which were taken on in an attempt to decrease the deficit lead to higher inflation (in 2007 CPI reached 6.7%) and low growth rate (in 2007 real GDP grew by 1.8%) (OECD, 2008). Along with these measures the government began the reform-process in the gas market and made necessary modifications to the gas price subsidy system of the country between the years 2007 and 2009.

The changes which were made by the government include:

• Opening the market up, market liberalisation (according to the European Union agreement)
• Create a new subsidy system

CASE STUDY

5. Methodology

        

The intention of this essay is to delineate and analyse the effects of the changes that the research question suggests. Theoretical background of the subject is compared with actual research comprising questionnaires and an interview answered by local people and government. The questionnaire examines the effectiveness of the new subsidy and free market as told by 10 Hungarians from different locations throughout the country. Their responses are contained in the appendix, while the interview, conducted with the Ministry of Transport, Telecommunication and Energy, provides an opportunity for in-depth opinion rather than just qualitative data. The Hungarian government published different documents on the key outcomes of the changes applied between 2006 and 2009 (MEH, 2008). In this essay I am going to compare the results of theory with the results of these documents.  

2.  The new subsidy system

Between 2002 and 2008 the government had a wrong economic policy; the state spent too much money on the welfare services while the economy’s growth rate was low and budget deficit was getting higher and higher. To reduce the external and internal debt and reach the macroeconomic equilibrium again the government made some reforms mostly in the welfare service including the gas subsidy system.

2.1 The principles of the new subsidy system

The government introduced the new system on 1st January 2007.  The social and labour minister announced that only two third of the households will be able get gas price compensation and then in the future the government will slowly reduce the number of households afforded this luxury. The minister said that: “we do not want to support the gas, but we would like to create a subsidy system which depends on the people’s need”. The government discriminated the price of the natural gas according to the people’s income.

Figure 3:  The gas demand social support by income categories in 2008

Source of the table: http://logsped.hu/gazartamogatas.html

2.2 Theoretical impacts of the new subsidy system

Figure 4:  supply and demand for natural gas in Hungary and the likely effect of the introduction of the new subsidy system

    Price of

     Natural        D        S-with the new subsidy (S’)

    Gas        

        S-with the old subsidy (S)

               Pe

               Pn

        Quantity of natural gas

                                           Qe        Qn        

As figure 4 attests, the government’s decision detracted from the amount of money that was being filtered into gas price compensation. The new subsidy system shifted the supply curve to the left. New supply curve became S’ from S. As the result we can see a movement along the demand curve, the price and quantity were affected-price rose (from Pn to Pe) and quantity became less (from Qn to Qe).

It must be considered that above model does not account for the price elasticity demand of the natural gas (PED). Generally, the demand for the natural gas inelastic, because the natural gas does not have many substitutes (substitution effect). It means as price rises, the demand will not proportionally decrease. Hence, the introduction of the new gas subsidy can only rhetorically aim to reduce the one-sided energy dependence and put pressure on the people to change to green energy or other energy types but reality it can be used to reduce the debt very well and reach the budget balance. The new gas price subsidy system affects particular social groups differently. In most cases someone with a lesser income has a higher PED (income effect) and thus spends a greater proportion of their income on gas bills. The latest government proposal in regard to these problems eliminates higher subsidy price for the needy. This system is more effective than the previous one, as it better supports those with lower incomes. Socially, it is more equal.  However a more effective system would be extensive price discrimination, introducing different levels of subsidy system for different incomes and social groups, however it would make the system overly complicated.

Figure 5: Diagram of price discrimination (Fisher, 1999)

        

As we can see in figure 5 the consumer surplus is marked as 2 and deadweight loss as 3. The price discrimination is expected to negotiate consumer surplus and deadweight loss only with respect to the PEDs of other groups. The monopoly profit is marked as 1; we can see from the graph it is really significant.

The introduction of a new subsidy system would increase the price of the natural gas for some social groups,  also it is likely to increase effectiveness of the subsidy system, because it will take less money from the budget as it did and it can focus more on the low incomes so it became more socially equal.

2.3 Results of Research

According to result of the questionnaires, people usually spend about 36% of their income on the bills and around 25% of their income on the gas bills—these rates are high. They usually receive around 14.5 HUF/m3 as gas price compensation. We can see a huge difference between parts of country; in central part where the income is high people usually do not get any price compensation while in the northern part they usually get around 22.1-32.8 HUF/m3(in the northern part of the country the income is much lower).  We can see that it supports the poor’s need better but the people do not feel really like that, and they do not think that the new system is more equal. It is really a matter of perception. (Data of questionnaire results, appendix 1.3, 2.8 and 2.9).

3.  Liberalisation of the energy sector in the world and the special case of Hungary

In the past few years, almost every energy market in the developed world has been liberalised due to new technology and the development of economic theories. The definition of the liberalisation is the opening up of markets to the free market forces of supply and demand, in the case of the energy market that is to change a restricted market to a competitive one. The aims of the liberalisation are to bring down the prices for the consumers and increase competition in the market.

According to the European Union regulations, member countries had to open the market up until the end July 2004 for the industrial users and July 2007 for the household users. After these dates the consumers can freely choose from the members of the competitive market.

In Hungary the market opened in January 2004 only for the big consumers, the whole market became free at 1st July 2009. In 2006 the legal degree of the market opening was 67%.

3.1 The aims of the European Union liberalisation process in the energy market

According to the Union, the main goals of the liberalisation are to improve the efficiency of the energy sector, it could reduce the one sided energy supply and the liberalisation can improve the competitiveness of the European market.

3.2 Theoretical Impacts of the liberalisation

 With the liberalisation process the government removes the only supplier in the market situation, so the monopoly power of E-ON Hungary Zrt will disappear. It means a new market where the consumers can freely choose between the suppliers. Liberalisation creates a price and quality competition and a totally new market structure for the natural gas.

Figure 6:  Influence of the liberalisation on the supply and demand

Price of

Natural        D        S

Gas        

                S’        

        P

         P’

        Quantity of natural gas

                                            Q               Q’

As shown in Figure 6 theoretically the opening up of the market for natural gas would cause a right shift of the supply curve from S to S'. With the new equilibrium price (P') being lower than the previous (P), the new equilibrium quantity (Q') being higher than the previous (Q). These result in lower price and higher quantity produced.

Figure 7: the new market type of the Hungarian natural gas after the liberalisation

The new market type will be an oligopoly, because only a few firms will be able to appear in the market, because of the high capital barriers, and these firms will share the output of the market between each other, and the natural gas is a homogenous good.

As we can see on figure 7 the oligopolies acting as a monopoly. The profit is maximized where the marginal cost equals marginal revenue.  The abnormal profit is still possible, and we got the same price as in the situation of monopoly (P).  The main problem with the oligopoly market is the possibility of the collusive (cartel), non-collusive oligopoly, what will lead to increase in the price or to price rigidity. This problem is coming from the special demand curve (kinked demand curve) of the oligopolistic markets, so this market type will not lead to a decrease in the price, but it could help to reduce the dependence on Russia, taking the import from other places where the natural gas is cheaper. We can see a huge danger of the cartel in this case.  

Liberalisation can lead to overprovision of demerit goods, private companies not taking into account the negative externalities of supply shift to right in the natural gas market.

Figure 8: Negative externality of the natural gas liberalisation

    Price of         MSC

Natural gas                     Welfare loss

        a            MPC

                P’

        b

                P1

MSB

        Quantity of natural gas

                                                  Q’          Q1

As shown on Figure 8 the marginal social cost (MSC) curve is higher than the marginal private benefit cost (MPC): increase in the supply of the natural gas creates external costs that are damaging the third parties (eg. more CO2 can realise to the atmosphere), results a market failure:  The firms will produce at Q1 instead of Q’ which is the socially efficient output so the actual output is higher than optimum quantity consumed so the goods are too valued .The welfare loss on natural gas provision is determinate between points a and b.

Theoretical results suggest that liberalisation would make the system more effective and could reduce the price or at least leave at the same level. However in practice the government proposal fails against to reduce one type of energy dependence, Hungary uses natural gas in 40.4% and it causes a significant welfare loss to the society.

3.3 Results from the Research

According to the ministry, the liberalisation does not create more work for Hungarian state offices, but to create the legalisation was a huge challenge for the Ministry and Hungarian Energy Office. The ministry calculated with a middle distance when a competition could start, and according to ministry the competition will be huge in the quality and not in the price. The price change mostly depends on the exchange rate of the forint to the dollar and on the procurement price.  According to the Ministry the green energies and alternative energies can reduce the one sided energy dependence, but the expense of return is huge, because they have to build a totally new infrastructure for another type of energy.  While the as the questionnaires show the people have thought about changing for a new energy type after the gas price has increased so many times. As I wrote, it is a huge danger for the cartel in the market of the natural gas, as we can see from an example in Western-Europe.  The E-ON and GAS DE FRANCE built up a cartel and they shared the market and the output of the market between each other. The cartel is one of the hugest risks of the liberalisation, because the firms do not want to lose profit and they are afraid of the price war. The European Union’s penalty was 1 billion and 106 million euro.  The results of the market opening which was published by the Hungarian Energy Office in 2006, 2 years after the market was opened for the big consumers, shows “7% of the gas consumption traded on the free market in the first year and 52 registered customers changed supplier, but there was limited available cross border capacity for the free market segment at the Eastern border and weak financial incentive of eligible consumers”. ( Sources: Questionnaires, Interview: Appendix 1.3 and Appendix 2.1)  

4. Conclusion

The purpose of this essay is to analyse the impacts of the changes made by the government in the Hungarian natural gas market in terms of the price of natural gas and the one-sided energy dependence of Hungary.  Both the theoretical and practical results prove that the current changes are answers to existing problems: the old subsidy system was ineffective and did not support low incomes well.  Also, it ate up a huge amount of money from the budget each year.  The government decision has been successful in economic and social terms, because the new subsidy system has helped to reach the budget balance and with the price discrimination the subsidy system can be more focused on the poor’s needs.  Meanwhile, in political terms the decision has not been successful; people do not believe the new subsidy system is more equal.  We cannot yet judge the liberalisation, but if the state can reduce the role of the E-ON in the market and can create competition, then the opening of the market will be successful and we can get lower prices.

On the other hand, the people do not feel like that they are well informed, and their opinion is that the government did not think these changes over properly.  We can see an issue of comprehension of situation between the theoretical impact and practical impact of the liberalisation. According to the theory, we are supposed to get a lower price in the open market, while according to the ministry; we would see a competition in quality and not in price.

The reforms made to the Hungarian natural gas market by the government would probably repair some of the existing difficulties and provide some aid in the short term. However, the field of the natural gas--which is probably the most important and complex energy market--would not be changed deeply, nor effectively, and in the long-term the changes would not be fully beneficial.

The governments and the state are still facing a big problem: to solve the one-sided import and energy dependence. Hungarian people agree that the one sided energy dependence is huge problem and very dangerous for the country and for the whole nation. According to the Ministry, Hungary has a good energy strategy. Hungary supported the building of the Nabucco pipeline from the beginning, with this solution Hungary has solved the one sided energy import dependence, because the Nabucco will bring the natural gas from the Asia, but it is a long term solution and it takes around 5 years to build it and it will take lots of money from budget as well. The ministry has some program to reduce the one sided energy dependence, but they support these only from European Union sources, the Hungarian government should support these from own sources and in bigger scale. It should be taken account of that this extended essay is in essence an economic analysis and as such tried to maintain absolute focus on economic problems. However, it must also be recognized that the question also happens to be of high political relevance and therefore some of its repercussions are beyond that of the kits of economic analysis. The opinions available often can be ideologically or politically biased.  The government could force the big companies to spend some parts of their profit on building storages or support the Nabucco pipeline. The greatest limiting factors of this essay are the small number of questionnaires in the sample and interviews which were carried out.

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Appendix 1. Questionnaire

Appendix 1.1. The original form of the questionnaire

A Nemzetközi Érettségi diplomámhoz végzek egy kutatást a magyarországi gázpiacban végbemenő és tervezett változásokkal kapcsolatban. Ehhez kérném, hogy segítsen ennek a kérdőívnek a kitöltésével.

Köszönettel,

Szakál Ádám

Melyik régióban él Magyarországon?

Faluban vagy városban él?

Bevételei hány százalékát költi a számlákra, ezen a belül a gázszámlára?

Mekorra gázár kompenzációban részesül?

Válaszoljon 1-től 5-ig (1: egyáltalán nem igaz 5: teljesen igaz)

 -Szerintem igazságosabb az új támogatási rendszer        

                 

                         1         2        3        4        5        

-Szerintem az új támogatási rendszer jobban szolgálja az alacsony jövedelműek érdekeit          

1         2        3        4        5

-Szerintem az új rendszer több adminisztrációs teherrel jár

1         2        3        4        5

-Szerintem veszélyes Magyarországra nézve az egy oldalú energiafüggőség

1         2        3        4        5

-Szerintem a liberalizáció hatékony árversenyt teremt a piacon

1         2        3        4        5

- Szerintem olcsóbbá válik a gáz a liberalizált piacon

1         2        3        4        5

-Véleményem szerint a liberalizáció az egy oldalú energia függőségen

     

JAVÍT                         RONT                NEM VÁLTOZTATHAT ÉRDEMBEN

-Ön váltana gázszolgáltatót az alacsonyabb ár reményében

         IGEN                        NEM

-A sorozatos gázáremelkedések után elgondolkodott azon, hogy más energia típusra váltson

         IGEN                        NEM

A kormány:

elegendő időt hagyva, átgondoltan vezette a változásokat                1        2        3        4        5

-megfelelő módon tájékoztatott a változásokról                        1        2        3        4        

1.2 Appendix

English Translation

I am doing a research about the current and planned changes in the Hungarian natural gas market for my International Baccalaureate Diploma. I would like to ask you to help me with filling in this questionnaire.

With thanks,

Adam Szakal

In which region do you live in Hungary?

Do you live in a city or in a village?

How many percentage of your income do you spend on the bills, and especially on the gas bills?

How much gas price compensation do you get?

Choose from 1 to 5 (1: not at all, 5: completely)

I think that that the new subsidy system is more equal

1         2        3        4        5        

I think that the new subsidy supports needs of poor better

1         2        3        4        5        

I think that the new subsidy has more administration work

1         2        3        4        5

I think the one sided energy dependece is dangerous for Hungary

1         2        3        4        5        

I think that the liberalisation will create an effecient price competition

1         2        3        4        5        

I think that the natural gas would be cheaper in the liberalisated market

1         2        3        4        5        

In my oppinion the liberalisation on the one sided energy dependece

Improves         Declines         does not change really

Do you choose other gas supplier for the cheaper price

YES         NO

Have you thought about to choose other energy type after the many increasing in the price of gas

YES         NO

The government

-introduced the changes leaving enough time and thinking them over        1        2        3        4        5

-informed appropriately informed about the changes                        1        2        3        4        5

                

---

Appendix 1.3. Results

Appendix 1.4. Notes

NGP – Northern Great Plain region (87939 HUF (~$440))

BP – Budapest, numbers indicate the districts of the city (128585 HUF (~$643))

C- Central region (98373 HUF (~$492))

income data from (KSH, 2005)

image from Wikimedia

                                                                        

NOTES TO APPENDIX 1.3. Result

IMP= improve

D.N.R= does not really change

SGH= Southern Great Plain

CH= Central Hungary

NH= Northern Hungary

NGH= Northern Great Plain

ST= Southern Transdanubia

CT= Central Transdanubia

WT= Western Transdanubia

                

Appendix 2.1  Interjú a Közlekedési, Hírközlési és Energiaügyi Minisztériummal

The original version 

Hogyan vélekedik a hozott intézkedésekről? (az új gázár támogatási rendszer és a gázpiac liberalizációjáról)

A piac megnyitásával végleg eltűnt a magyar gázszektorból a közüzemi szolgáltatás intézménye, a teljes fogyasztói körre kiterjedő állami ármeghatározás. A megnyitott piac legfontosabb előnye a fogyasztók számára, hogy több Egyetemes Szolgáltató és Kereskedő üzleti ajánlata közül választhatják ki a fogyasztók a nekik legmegfelelőbb konstrukciókat. Ettől természetesen nem lehet rögtön áresést, és a verseny azonnali beindulását várni, azonban hosszabb távon kiszámítható, versenyképes piaci rendszer alakulhat ki a jövőben.

A piacnyitást követően a fogyasztók egy bizonyos, törvényben meghatározott köre jogosulttá vált az úgynevezett Egyetemes Szolgáltatói (ESZ) körben vételezni a földgázt. Az ESZ célja, hogy az erre jogosult fogyasztók (elsősorban a lakossági gázfelhasználók) kiszámítható és ellenőrzött feltétlek mellett juthassanak a szolgáltatáshoz. Az egyetemes szolgáltató méltányos, könnyen és tisztán összehasonlítható, átlátható árszabások alkalmazásával kínálja termékcsomagjait. Mindez nem jelenti azt, hogy ezek a végfogyasztói árak jelentősen eltérnének a piaci áraktól, ármozgásoktól, hiszen az egyetemes szolgáltatók is a nagykereskedelmi piacon vásárolnak.

A kereskedők a saját üzletpolitikájuk, a pillanatnyi beszerzési ár, illetve a piaci verseny által diktált feltételek alapján fogják értékesítési áraikat, s ezen belül árrésüket kialakítani, természetesen figyelembe véve az általuk kiszolgálni kívánt fogyasztók fogyasztási szokásait, és egyéb szempontjait. A kereskedők célja a felhasználók „megszerzése” és „megtartása” ezért a piaci viszonyok által meghatározott árakat és fizetési feltételeket kínálnak majd.

Mennyit spórol a magyar állam az új gázár támogatási rendszer bevezetésével évente?

Kérdésére az SZMM tud majd válasszal szolgálni Önnek, hiszen ők a felelősei a ártámogatási rendszer működtetésének.

Mennyivel több adminisztrációs teherrel jár a új rendszer a minisztériumnak és más szerveknek?

Az új rendszerrel többlet adminisztrációs terhekkel nem jár a minisztérium és más hatóságok számára. Bizonyos feladat-átrendeződés ugyan történt a KHEM és Magyar Energia Hivatal (MEH) között, de ezek többletterhet nem jelentenek egyik szervezet számára sem.

Ugyanakkor azt nem szabad elfelejteni, hogy a minisztérium elsődleges feladata a jogszabályalkotás, tehát igazán feladatot a liberalizált piac megteremtését biztosító jogszabályok előkészítése jelentet. A piaci folyamatokba, a megfelelő jogszabályi keretek kialakításán túl, a minisztérium nem avatkozik be.

A MEH-nek az Egyetemes Szolgáltatói körre vonatkozóan árellenőrző szerepe lett, illetve ott végzik az energiaszektorra vonatkozó engedélyek kiadását és tevékenységek ellenőrzését is . Azonban az új támogatási rendszer kicsiny többlet teherrel jár a fogyasztók számára.

Mekkora időtávval számol a minisztérium mikorra jelentős árverseny alakulhat ki a liberalizált piacon?

Ha az EMFESZ működésére gondolunk, akkor az árverseny voltaképpen már a múltban is megvolt,2004 óta, azonban tényleges, a fogyasztók számára is „árversenyként” érzékelhető rendszer kialakulására csak középtávon számíthatunk.

Ez a verseny „árversenyként” elsősorban a kereskedői oldalon jelentkezik majd, hiszen az egyetemes szolgáltatás árképzése és rendszere jogilag meghatározott, és a MEH által ellenőrzött, tehát inkább az adott ár ellenében járó szolgáltatások minőségének javulására számítunk. Mondhatjuk azt is, hogy nem „árversenyre”, hanem inkább „minőségversenyre” számítunk az Egyetemes Szolgáltatói körben.

Hány százalékkal csökkenhet a gáz ára a liberalizált piacon vagy csökkenhet egyáltalán?

Az egyetemes szolgáltatói (lakossági) és kereskedelmi végfelhasználói gázárak alakulásáért elsősorban a nagykereskedelmi beszerzési árak és a dollár-forint keresztárfolyam a felelős, tehát Magyarországon minden árváltozás elsősorban ennek a két tényezőnek a függvénye. A gáz „nagykereskedelmi beszerzési árát”  a kőolajtermékek ára határozza meg, tehát ezen termékek árváltozása és a forint erősödése-gyengülése határozza meg az árakat.

Erre a beszerzési űrra teszik aztán rá a kereskedők azt az árrést amivel még úgy vélik, hogy versenyképessé tehető a gáz, amit kínálnak.

Fontos azonban tudni, hogy  lakossági fogyasztók érdekeinek védelme miatt, az Egyetemes Szolgáltatói ellátás során ez a bizonyos árrés (a haszon) és a beszerzési árra rápakolható egyéb díjtételek rendeletben szabályozva, maximalizálva vannak!

Mennyire tartja veszélyesnek, hogy a magyar gáz ellátást és a magyar importot egyetlen cég tartja a kezében (E-ON HUNGÁRIA ZRT)?

Még a piacnyitás előtti időkben sem egyedül az E.ON hozott be gázt Magyarországra, hiszen az akkor importált gáz kicsi része más nagykereskedőkön (TIGÁZ, EMFESZ) keresztül jutott be az országba.

Jelenleg több cég rendelkeznek földgáz nagykereskedelmi engedéllyel, ami magában foglalja az importengedélyeket is, tehát nem csak az E.On „kezében van a magyar földgázimport” egésze. Az más kérdés, hogy az engedélyek birtokában, a piaci igényeket és a tárolási lehetőségeket felmérve melyik cég él a gázimport-engedély biztosította jogokkal.

Abban azonban bizonyosak vagyunk, hogy az E.ON-nak mint a gázrendszer működésben, bevételgenerálásban érdekelt vállalatnak nem célja és érdeke a hazai gázellátás bizonytalansága.

Lát e esélyt arra, hogy az Oroszországtól való függőség csökkenjen a liberalizáció által?

Magyarország Oroszországtól való gázfüggősége nem a hazai gázpiac megnyitásától csökkenhet, hanem az alternatív energiaforrások terjedésétől, és a gázforrások és szállítási útvonalak diverzifikációjától. Ennek lehet eszköze például a Nabucco gázvezeték, melynek megépülését Magyarország a kezdetektől fogva támogatja.

Az alternatív és megújuló energiaforrások elterjedését ösztönző stratégiáról és az ehhez kapcsolódó feladatokról az alábbi linken keresztül talál információkat:

A kormány miért a gázt támogatja ilyen nagy mértékben , nem inkább a zöld energiákat kéne előnyben részesíteni, és ez lehetőséget adna arra, hogy csökkenjen az egyoldalú energia függőség?

Alapvetően a kérdéskör megközelítése miatt tűnik úgy, hogy a Magyar Állam elsősorban a gázt „támogatja”. Ez így, az ok-okozati probléma felcserélése miatt nem igaz, hiszen az állam nem azért támogatja gázárkompenzációval a lakosságot, hogy a gázhasználatot terjessze, hanem azért van szükség a támogatásra mert a lakosság használja a gázt.

Az 1970-es években a gáz olcsó ára miatt nagyon sok helyen (családok, üzemek, erőművek) áttértek a gázzal történő fűtésre, termelésre. Azonban az eltelt 30-35 év alatt a trend megfordult és egyre drágább lett a gáz. Ez azzal járt, hogy a mai fogyasztói gázárak mellett már bizonyos szociális megfontolásokból segíteni kell azokat a családokat (és itt kifejezetten szociális alapú ártámogatásról van szó) melyeknek nehézséget okoz a gázszámla kifizetése. Logikusan merül fel a kérdés, hogy akkor miért nem tér vissza most más fűtési módra, energiahordozóra az, aki akkor átállt a gázra. Azt azonban ne felejtsük el, hogy akkor nem egy már meglévő infrastruktúra átépítésével tértek át a gázra, hanem újonnan építették ki a gázfelhasználáshoz nélkülözhetetlen fogyasztói infrastruktúrát (vezetékek, fűtőtestek, stb.). Jelenleg pedig a már meglévő, „gázra alapozott” infrastruktúrát kellene tömegesen átalakítani más tüzelőanyagra. Ez sok erőmű esetében természetesen megoldható, azonban itt is megtérülési lehetőségeket kell figyelembe venni, de az erőművek és nagyüzemek többsége (például a gázválság idején) át tudott állni kőolaj felhasználásra (azonban ez sem olcsóbb, mint a gáz).

Az „azért támogatom, hogy legyen” elv alapján az állam költségvetési és EU-s forrásokból olyan beruházásokat támogat, melyek éppenséggel az egyoldalú gázfüggőség ellen nyújtanak megoldást. Ilyen a megújuló energiaforrások felhasználását ösztönző KEOP-os pályázatok 4. és 5. prioritása, illetve az energiahatékonyságot támogató pályázatok (panelprogram, Zöld Beruházási Rendszer, NEP)

Appendix 2.2 English Translation- Interview with the Ministry of Transport, Telecommunication and Energy

What do you think about the liberalisation?

With the liberalisation the public utility service and the state price definition will disappear totally in the Hungarian natural gas market. One of the biggest advances of the liberalisation is that the consumers can choose between offers from different suppliers and they can choose the most comfortable construction for themselves.  Obviously we will not get price reduction and huge competition at the beginning, but in long term we will get a safe and competitive market system.  After the liberalisation the consumers will get the natural gas from universal suppliers (ESZ). The aim of the universal suppliers is that the consumers (mostly the households) would get the supply with calculable and controlled conditions.  The universal supplier is fair and clearly and easily comparable and it offers packages with clear settings of prices. The rule of pricing has been decided by Ministry of Transport, Telecommunication and Energy and Hungarian Energy Office. However it does not mean that the final price will be different from the market price, price movements, because the universal suppliers buy in the world market.

The suppliers will create the price according to their management, procurement price and the market competition. Obviously they will consider the habits of their consumers and other prospective. The aims of the suppliers are get the consumers and keep them so they will offer the price according to the situation of the market.

How much money the Hungarian state can save on the new subsidy system?

How much more administration burdens will ministry or other ministries or offices get from the liberalisation?

The liberalisation will not put more administration work on the ministries or offices. Some of the exercise has changed between the ministry and the energy office, but it does not mean more work for the agencies. However the exercise of the ministry is the legalisation, so the main work was to prepare the legalisation for the liberalisation. The ministry does not want to influence the market further than the legalisation. The Hungarian Energy Office has some power over the price, they are investing the market.

How long does it take to have a huge competition in market according to the ministry?

The EMPESZ has been in the market since 2004 so the price competition has existed in the past. According to the ministry they calculate with middle distance in the question of price competition.  The competition will appear in the side of suppliers, the price creating is controlled by laws and the Hungarian Energy Office. According the ministry we will see a quality competition instead of price completion between the universal suppliers. We are looking for a quality improvement.

How many percentages price of the gas could decrease with in the opened market?

The price of the natural gas depends on the procurement price and on the exchange rate of dollar to forint (HUF). These two are the most significant element of the price change.  Procurement price of the gas depends on the price of crude oil. The price of the natural gas mostly depends the change of the exchange of the forint. After that the universal suppliers put their profits on that price what they think that they will be competent in the market. To protect household consumers the universal suppliers can only a certain profit margin on the procurement price.

What do you think, how dangerous is only one supplier keep the Hungarian import and supply in its hand (E-ON HUNGARIA)?

Before the market liberalisation not only the E-ON brought natural gas into Hungary, because like EMFESZ imported natural gas, but it was not so significant.  Many companies have supply permit now, which includes the import permits as well. It is not fully true that the E-ON keeps the whole Hungarian import in its hand. However not too many company has the facility to store and can satisfy the market claim. It is just the E-ON HUNGARIA.  We are sure that E-ON ‘s aim is not the insecurity of the Hungarian supply.

Can you see any chance to reduce the Russian dependence by the liberalisation?  

The liberalisation will not help to reduce the dependence from Russia, but the spread of alternative energies, and new natural gas sources or new transport line can help in it. One of the instruments can be the Nabucco pipeline, the Hungary has supported from the beginning. The Hungarian government has programme to support the alternative and renewable energies, you can find some information on this link.

Why does the government support the natural gas in such a huge scale, instead of the green energies which can help to reduce the one-sided energy dependence?

The government does not support the natural gas because it wants to spread of its use, it want to support the households who is using the natural gas. Since 1970s because of the cheap gas price in many places, the households, industrial users have changed to the natural gas. In the past 30 years the gas is getting more expensive. Now because of the gas is more expensive, the government supports households from a social reason.  It is a logic question why people do not change to another energy type now, who changed to the natural gas in the past. In the past, they build a totally new infrastructure for the natural gas, they did not on a previous one. Nowadays we would have to change the whole gas based infrastructure to change to another type of energy. Obviously we could do that but we have to notice that the expense of return is huge. Most of the power plants can change to crude oil, but it is not cheaper than the natural gas.

The government supports many investments from European Union sources that can reduce the one sided energy dependence.  These are the KOEP programs, and other programs support the energy use efficiency like panel program, Green Investment System, NEP.  

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