Hera: HEP Supplier in the Wholesale Gas Market

Hrvatska elektroprivreda (HEP) will be the supplier in the wholesale gas market for the period from August 1, 2018, to March 31, 2019, announced the Croatian Energy Regulatory Agency (Hera) on its website.

Hera, namely, made a decision at the meeting of the Management Board held in the middle of last week (June 27) designating HEP as the supplier in the wholesale gas market for the period from August 1 of this year to March 31 of next year.

>>> HERA announced a tender for the supplier in the wholesale gas market

The decision also determined that during this period the premium or fixed part of the reference price at which the supplier in the wholesale gas market will sell gas to suppliers under the public service obligation will amount to 0.0402 kuna per kilowatt-hour (kWh).

The new Gas Market Act, which came into force on February 3, 2018, designated HEP as the supplier in the wholesale market until the determination of the supplier through a tender. The law also stipulated that Hera conducts a public tender and, by decision, determines the supplier in the wholesale market for the period from August 1, 2018, to March 31, 2021, no later than July 1 of this year.

In the past month and a half, Hera conducted two tenders for the determination of the supplier in the wholesale gas market – from May 15 to June 1 and from June 13 to June 20, but did not receive any offers in those two tenders.

“Based on this outcome of the public tenders, it can be concluded that none of the suppliers is currently ready to take on the role, or does not want to be a supplier in the wholesale gas market in Croatia. Considering the aforementioned, and given the unstable situation in the procurement (wholesale) gas market in the first half of 2018, expecting – based on available expert estimates – that the situation in relevant wholesale markets will stabilize soon, Hera, in consultation with the Ministry of Environmental Protection and Energy, as the proposer of the law, but also as the body responsible for gas supply security in Croatia, decided to assign the public service obligation for a shorter period than provided by law,” the explanation of the decision states.

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Thus, the supplier in the wholesale gas market has been designated for the period from August 1, 2018, to March 31, 2019 (instead of until March 31, 2021), and Hera announced that at the beginning of next year it will conduct a public tender to determine the supplier in the wholesale gas market for the period from April 1, 2019, to March 31, 2021.

Hera also explains that for the determination of the supplier in the wholesale market for the period August this year to March next year, they conducted a ranking of suppliers, applying the criteria published in the documentation from the first tender (conducted from May 15 to June 1).

Using these criteria, a ranking of five gas suppliers was conducted, with HEP receiving the highest score of 10 points.

In second place is Ina with eight points, third is Gradska plinara Zagreb – Opskrba with seven points, while MET Croatia energy trade and PPD each have four points.

The Gas Market Act has determined a three-year period for adjustment or established a transitional period – from August 1, 2018, to March 31, 2021 – during which the supplier in the wholesale market will be able to sell gas under regulated conditions to suppliers under the public service obligation who decide to purchase gas for household supply needs. After March 31, 2021, the role of the supplier in the wholesale market will be abolished, and suppliers under the public service obligation will procure gas under market conditions, as stipulated by the new law.