(Hungarian Power Companies Ltd)

MVM Rt.'s main activities

Eight power station companies, six power distribution companies and the Magyar Villamos Muvek Rt. (MVM Rt., Hungarian Power Companies Ltd) supply Hungary with safe and reliable electricity. The basic task of MVM Rt. is to control the operation of the power system, as well as to carry out distribution and wholesale tasks, including import and export.
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The Hungarian power system

The total installed capacity of the Hungarian power system was about 7,500MW in l995, of which the public power stations represented about 7,300MW and industrial power stations the rest.

The capacity of oil- and gas-fired power stations is about 3,500MW, of which the ten biggest, 215MW condensation units, were built in the 1970s (at the Dunamenti and Tisza Power Stations). These cover about 28 per cent of installed capacity. The others are mainly smaller, heat supply, district heating power stations.

Hungary has coal-fired power stations of about 2,000MW. The biggest of these is the relatively modern Matra Power Station with an 800MW installed capacity, using domestic lignite. The other, mainly brown coal-fired power stations cannot be considered as modern, despite the refurbishments of the 1980s.

The only Hungarian nuclear power station is at Paks, beside the Danube. Paks operates four VVR 440 type units, each with a 460MW capacity (with a V 213 type pressurised water reactor). Availability of the units is excellent, and the power plant operates safely (it is regularly examined by the International Atomic Energy Agency).

Due to the geographical location of the country, only small hydro-power stations exist, with a total installed capacity of 48MW.

Nearly every public power station in the Hungarian system supplies heat in addition to electricity. These power stations provide two-thirds of country's heat demand, for district heating and industrial purposes.

In 1995, Hungary's electricity demand was 36TWh, 90 per cent of the value in 1989, which was the highest so far. The system peak load was 5,731MW in 1995. The high capacity of the nuclear power station (14 TWh yearly production of the nuclear power station covers about 40 per cent of the domestic electricity demand), the relatively constant load of the coal-fired power stations (8-9 TWh annual production is mainly determined by domestic coal mining) and the significant decrease in import power are characteristic of the structure of power production. Import power exceeded 11 TWh in 1989 (which covered more than 27 per cent of the total annual demand), fell back to one-fifth in volume, and by the mid-1990s represented only six to seven per cent.

Electrical energy consumption decreased by approximately 15 per cent between 1989 and 1992 but, after a two-year stagnation period, increased by about 2.5 per cent in 1995.

Development of a market-oriented power industry

In 1991, Parliament accepted a long-term energy policy, to go beyond the turn of the millennium. The need for this to be realised efficiently meant the structural transformation of the power industry. The first step was the transformation of MVMT (the Hungarian Electricity Board) into a group of companies by 1 January 1992. This temporary model made the statutory privatisation of the electric power companies possible.

Accepting the 1994 Act XLVIII on the Generation, Transmission and Supply of Electricity was a decisive step in a process of developing the new operational model of the power industry. This Electricity Act specifies a power system that:

  • is neutral in respect of ownership;
  • is supervised by legislation and public authorities;
  • ensures safe supply to customers;
  • guarantees the effectiveness of the least cost principle;
  • guarantees appropriate pricing and price regulation;
  • specifies environment-friendly operation and retirement;
  • gives preference to power generation by renewable energy sources or cogeneration;
  • can be developed flexibly with increasing electricity demand.

At the end of 1994 the Hungarian Government made a decision on the privatisation of the companies of the electricity industry. The main goals of privatisation are the efficiency improvement of electricity generation, transmission and distribution, as well as the reduction of costs, while maintaining continuous and reliable power supply in both the short and long term. Privatisation has to contribute to both the modernisation of the power system and the improvement of the state budget balance. The relevant governmental resolutions have established the operating and ownership structures of the electricity industry after privatisation.

With the elaboration of the details of this model, preparation for privatisation was finished by autumn 1995. In October of that year ÁPV; Rt. (the Hungarian Privatisation and State Holding Company Ltd) invited investors to bid for the minority package of shares in power plant and distribution companies. Minority shares of two power plants and all six distribution companies were partly sold in December 1995 and the majority of another power plant company in July 1996. The new owners are European power companies, or consortiums formed thereof. Privatisation of three power stations and MVM Rt. continued in 1996.

Long-term power plant development strategy

For safe electricity supply, MVM Rt. has elaborated a long-term power plant development strategy. This has set the following aims for capacity development:
  • power plants have to become more economical to let the transmitter and the suppliers obtain electric power at the lowest price;
  • the primary energy sources have to be diversified to such an extent that over the long term fuel supply must have acceptable risk;
  • such a power system has to be formed, the operation of which meets the flexibility and reserve requirements needed by inter-system relations (UCPTE);
  • the power system has to correspond with current environmental protection norms;
  • only those power generating units can be taken into consideration, which can be installed and operated safely, and which can be licenced and accepted in the long term by the public;
  • capacity development has to allow the fulfilment of the quantitative and qualitative requirements of electricity demand as well as the development of the national economy.

The above is proof that the new operation model of the Hungarian power industry is now well developed. It is said that the proof of the pudding is in the eating. It is evident that the operation of this model has to be proven in action in the following years. I hope that this process will continue with undiminished energy, the market-oriented operation will bring results, possibilities for carrying out the necessary developments will be created, for the benefit of the country and the consumers, and last but not least, to create profit for investors, manufacturers and suppliers.

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