Fact-finding mission to East Europe brings back details on the status of electric power, distribution sectors

Business America, Oct 21, 1991 by Jay Brandes

The National Electrical Manufacturers Association (NEMA) organized a fact-finding mission that visited Czechoslovakia, Hungary, and Poland this summer to study the electric power transmission and distribution sectors in those countries. The mission obtained detailed information about the status of the transmission and distribution equipment system in the three countries and the manufacturers supplying them.

The mission was funded by a U.S. Trade and Development Program grant and supported by the Department of Commerce. The delegation made site visits in Prague, Bratislava, Budapest, and Warsaw.

Czechoslovakia--The Czech and Slovak Federal Republic has separate utility entities for each of its two constituent republics. Until 1990, generation, transmission, and distribution functions were the responsibility of the Czech Energy Works and the Slovak Power Enterprises. In 1990, distribution was separated from generation and transmission. The generation and transmission grids in the two republics are separate. At present, all entities are state-owned.

The delegation met with representatives from the Czech Energy Works and the Ministry for Economic Policy and Development of the Czech Republic. A session was also held with the director of the energy department in the Federal Ministry of Economy.

The Czech Energy Works operates 7,000 kilometers of lines of diverse voltage. Most equipment is old and needs to be replaced. There are fault current problems and a considerable amount of maintenance is required. Most of the installed equipment is either from local manufacturers or from the U.S.S.R. The facility would like to connect to the Western European transmission grid (UCPTE) by 1995.

Present equipment does not comply with IEC standards, but plans are to purchase equipment that does. Local manufacturing firms would like to form joint ventures with technology transfer as part of the joint-venture arrangement.

The Czech Republic has eight companies responsible for distribution. There is interest in converting Prague's voltages by 1995. Considerable work is needed on both urban and rural lines, though the urban grid will receive attention first. Financing will be a key issue.

The price of electricity to industrial users was raised 100 percent last year and residential prices were raised 80 percent this year. Further increases will be necessary for prices to be comparable to West European levels by the end of 1992. The present pricing structure does not cover delivery cost from generation to customer. Inflation is already running at nearly 30 percent for 1991, and another currency devaluation is expected. The government needs to build reserves to be able to apply for credits/loans and is negotiating with the World Bank for a $250 million loan that will encompass the interconnection project with UCPTE.

Energy privatization plans are being developed. The Czech Ministry currently envisages the creation of stock companies of all entities beginning Jan. 1, 1992. The state will own 100 percent of the stock, dropping to a permanent level of 60 percent by June 1992. Forty percent will be offered to foreign firms and private investors. Entities have indicated that this transition is too rapid.

Sloval Republic--The delegation met with representatives of the Slovak Power Enterprises (SEP), the West Slovak Distribution Company, and an official of the Slovak Ministry of Economy. Electricity prices for industrial consumers increased by 80 percent on April 1, 1991, and residential prices were to be increased by 80 percent on Sept. 1. Privatization will be carried out through government offerings of joint stock companies.

SEP manages electricity dispatching among the three Slovak distribution companies, and is interested in simplifying transmission equipment. A network study has begun in preparation for the UCPTE negotiations. Extensive equipment replacement and automation may be needed. The three distribution companies which purchase electricity from SEP sell, in turn, to 30 county entities. SEP provides purchasing assistance. In rural areas cables are above ground and in cities they are buried. In some areas, poor-quality equipment causes environmental damage.

Hungary--The Hungarian Ministry of Industry and Trade supervises the diverse generation and distribution companies and one transmission company. The Hungarian strategic energy plan includes linking with UCPTE by 1995. This will require building lines, converters, and general modernization.

The delegation met with representatives of the Hungarian Electricity Board, the National High-Voltage Transmission Line Company, Budapest Electric Works, and Power Station Investment Company.

Electricity is purchased by the six regional distribution companies. Most lines in Budapest are underground. Distribution currently suffers from overload problems and expense. A feasibility study, under contract with a U.S. firm, is under way regarding load management of transmission and distribution. Other plans include constructing a new substation and increasing automation.