Annual Report 2015


Report 2015


Similar operating profit level – despite of changing external environment

Operating profits of FGSZ in 2015 were similar to prior year figures, the unfavourable effect of changed domestic regulatory environment was mainly compensated by the effect of changes in macro environment. The effect of decrease of public utility charges (valid from 2013) still has an overall unfavourable effect, therefore operating profit is lower. The combined effect of changes in regulatory environment from 01.07.2015 resulted in a changed structure of domestic revenues, but total regulated revenues did not change significantly.

Decreased domestic gas transmission, decreasing operating revenues

Revenues from domestic transmission services totalled HUF 59bn which is lower by 2% than base period figures. Lower revenues are due to the combined effect of decreased annual capacity demands and the lower volume-driven revenues in line with lower transmission volumes and decreased turnover fee tariff which was partly compensated by the effect of significantly higher short-term capacity bookings.
Domestic transmission volumes are slightly lower by 7% than base period figures mainly due to the lower level of injection volumes.

Higher transit transmission revenues in line with favourable external environment

Revenue from natural gas transit is HUF 21bn, increased by 8% compared to the base period. Favourable FX changes could overcompensate the negative effect of lower transit tariffs. Total transit transmission volumes were lower by 6% than prior year mainly due to the lower transmission volumes to Romania and Ukraine, transit transmission volumes to Serbia, Bosnia and Herzegovina were somewhat above base period figures.

Strict control of operating costs

Level of operating costs were similar to prior year. Gas consumption of the transmission system and pressure increase fees were lower, in line with lower domestic and transit transmission volumes, and compensated the negative effect of certain year-end other expenditures. Cost of maintenance activities and other costs were slightly lower than prior year as a result of strict cost control.

Regulated transmission tariff changes

The transmission tariffs regarding FGSZ essentially remained the same both in content and in size in 2015. However, there have been some changes in the rules that govern the application in the spirit of the preparation for the EU-level harmonisation of applicable network usage regulations (operational and commercial code regulating capacity allocation mechanisms) which entered into force in 2015, and the tariff system. In this context, the authority responsible for setting prices, the Hungarian Energy and Public Utility Regulatory Authority rearranged the entry and exit charges, which did not increase the total earnings of FGSZ, but can facilitate more effective cost management for the network users. In addition to this, the regulation now includes new product implementation (quarterly and within-day capacity booking), and also the new method of pricing within-year standard capacity products. In legal terms in 2015 the natural gas transmission market became a two player market with respect to which the regime of balancing payments regarding the sharing of revenues from system usage fees has been implemented on the one hand, and on the other the nominal tariff has increased in a way to ensure that the performance position of FGSZ remained unchanged as a result of the two events.

The official cost review that began in 2013 was not finished in 2015, instead it will be replaced by a new cost review procedure in 2016. Thus in terms of regulation the regulatory cycle that began on 1 January 2010 is still in effect, the new price regulation cycle is expected to enter into force on 1 January 2017.