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The moratorium on the price of universal gas service and some of its consequencesPublished: 1 of December, 2010

Soon after it came to office, the Government of Hungary declared a price moratorium on the energy prices under the universal service scheme. The two most important ingredients of the amendment are the following: first, the right to determine universal service prices is returned from the Hungarian Energy Office (HEO) to the minister responsible for energy (currently the Minister of National Development); secondly, until a new ministerial instruction the most recently (i.e. on 1 April 2010) published universal service prices will stay in force. Freezing regulated prices and, accordingly, the suspension of the effective system on price regulation, even by itself, quite obviously ampli- fies investor risk in the sector. What makes a big difference, however, is if the moratorium gener- ates losses for affected market participants, and if so, how much, compared to calculations based on the regulation formerly in force. This is the question that we seek to answer in this article, specifically for the domestic universal service of natural gas. A similar analysis of the electricity secor is considered to be less relevant, since as of the 1st of July 2010 the tariffs announced b universal service providers in the electricity mar- ket to entitled customers are below the frozen prices Developments of the last six months in the electricity market do not indicate a substan- tial cost based pressure to increase the universal service prices of electricity.