Kaleidoscope: the Hungarian electricity market in 2007Uploaded: 1 of January, 2008

Kaleidoscope 2007 - sponsored and supported by the Hungarian Competition Authority - summarizes the most important developments regarding competition in Hungary and includes a more detailed analysis of selected sectors. REKK staff presented the article on the state of the Hungarian electricity sector at the beginning of 2008. The study provides a critical overview of the new regulatory framework of the electricity sector introduced from Jan 1, 2007. Following the short introduction of the players and regulated activities the authors concentrate on the regulatory mistakes that bias the original goals of liberalization: increasing efficiency and introduction of competition. We show that the demand side liberalization was introduced leaving the concentrated supply side untouched. Unbundling and third party access rules - the most crucial regulatory rules of the network industries - were designed inappropriately. Regarding the developments at the beginning of 2008 we shortly describe the debate on the prime minister's statement on March 11, 2008 to separate the TSO from MVM and the June 4, 2008 decision of the European Commission to end long term power purchase agreements (PPAs) for electricity because they constitute unlawful and incompatible state aid to power generators. Finally we point out some further problems that might arise in the year 2008 and describe the price developments that we could observe till June 2008.