PSE-Operator S.A. Annual Report 2006
2
PSE-Operator S.A. is the transmission system opera-tor (TSO) of the Polish Power System. It performs the aforementioned function within the scope and in the manner prescribed by the binding legal regula-tions, and in accordance with the conditions stipu-lated in the decision by the President of the Energy Regulatory Office.
The PSE-Operator S.A. company was established with a notarial deed dated 17 February 2004 as a sole-stock-holder subsidiary of Polskie Sieci Elektroenergetyczne SA (PSE SA).
It obtained legal status on 3 March 2004 in the result of an entry into the National Court Register under No. KRS 0000197596, kept by the District Court for the capital city of Warsaw, 12th Commercial Division.
On 15 April 2004 the PSE-Operator S.A. company received a license for running business activities con-sisting in transmission and distribution of electrical energy within the territory of the Republic of Poland. It commenced the licensed activities on 1 July 2004, taking into lease from PSE SA an organized part of the enterprise consisting of transmission assets. As of 31 December 2006 the initial capital of the Company amounted to PLN 1,000,000 divided into registered stocks of nominal value PLN 100 each. In accordance with the legal framework as of 31 December 2006, a change in the ownership occurred in the result of which PSE-Operator S.A. is now a sole shareholder company of the State Treasury.
Who we are
Where we are going
PSE-Operator S.A. is responsible for guaranteeing continuity of electricity supply to its customers and makes every effort to supply energy of proper qual-ity, following at the same time the principle of the lowest costs possible.
At the end of 2006, due to the change in owner-ship, PSE-Operator S.A. immediately commenced works on preparation of a new strategy of individual activities of the transmission system operator on the domestic and European electricity markets.
The main strategic goal of PSE-Operator S.A. is pro-vision of electricity transmission services according to objective and transparent rules ensuring equal treatment of the parties, and with due respect for the natural environment.
As it takes care of the country’s energy safety, a pri-ority task of PSE-Operator S.A. is to build new and to modernize the existing lines and substations with the use of state-of-the-art technologies and with the environmental protection regulations observed. PSE-Operator S.A. takes efforts to eliminate hazards to the company’s activities as the national electricity transmission system operator, particularly by means of bringing about formal takeover of the transmission assets*, development of the transmission system and improvement of solutions in the area of the bal-ancing market.
A landmark year
Dear Ladies and Gentlemen,
Once again I am very privileged to have the opportunity, on behalf of the Management Board of PSE-Operator S.A., to write these introductory words to the Annual Report.
July 1, 2007 will be the third anniversary of the begin-ning of our operations as a transmission system oper-ator. Ever since then the Management Board and staff have been working to build up an independ-ent company operating in a transparent and non-discriminatory manner, and our efforts have
concen-trated on fulfilling the tasks and obligations which are laid down for transmission system operators by law and by decisions of the President of the Energy Regulatory Office.
Many events in 2006 had a significant impact on the operations of PSE-Operator S.A. I think that anyone who observed the company’s activity over the course of the year will agree with me that it was a difficult time for us, but one which ended with many important successes. You will read all the details in this Report, so I will limit myself here to pointing out just a few of the most impor-tant events and statistics. We were working in conditions much influenced by the great pace of events linked to the implementation of the governmental “Program for the Power Sector”. As Polish transmission system operator since 1 July 2004, we are well recognized and a valued international partner. We have got an agree-ment from the President of the Energy Regulatory Office for a “Development Plan for Meeting Current and Future Demand for Electricity in 2006–2020”. On 1 June 2006 we put into effect our Instruction of the Transmission System Operation and Maintenance. We are also active-ly involved in the process of creating a regional electric-ity market for Central and Eastern Europe according to ERGEG Electricity Regional Initiative.
PSE-Operator S.A. achieved good results last year. Our net profit amounted to PLN 208.5 million. Investment was also intense: expenditure on the investment tasks and
projects contained in PSE SA’s investment plan for 2006 totalled PLN 450.3 million. In turn, fixed and intangible assets worth a total of PLN 401.8 million were brought into use. In December 2006, own-ership of all shares in PSE-Operator S.A. was transferred from PSE SA to the State Treasury. We became a state-owned company, thus satisfying the requirement laid down in Article 9k of the Energy Law Act: “The operator of a transmission system shall operate in the Joint Stock Company form in which the sole shareholder shall be the State Treasury.” This is the first step towards com-pleting the process by which the transmission system operator will achieve full independence.
A solution is still required regarding the transfer to PSE-Operator S.A. of the transmission assets and, five regional dispatching centres, today still separated companies. A large majority of European transmission system operators are the owners of their transmission grids. Experience relating to the development of elec-tricity markets in EU countries shows that even those few countries whose transmission system operators did not own network assets are now abandoning that model. According to Directive 2003/54/EC, in order for real competition to exist in the electricity mar-ket, access to the network must be free from dis-crimination, transparent, and accurately valued. This means that transmission and distribution operators must be separated in both a legal and an organiza-tional sense. They must have appropriate powers to take effective decisions in relation to network assets.
A landmark year
Their independence from the interests of producers and suppliers should be guaranteed. There still remains much to be done in this area.
So what are our the most urgent actions for the future? The most important thing at the present time is to struc-ture the transmission network operator as quickly as possible in an organizational and legal form which will enable it to function efficiently and independently. There is therefore a need for changes in the rules and statutes, for the transfer to PSE-Operator S.A. of essential assets, and for adaptation of the existing organizational struc-ture to meet new needs. These are only some of our challenges for the future.
As the national transmission system operator, we will be working closely with all business entities and national authorities in the following areas:
■ assurance of efficient operation of the Polish Power
System, and in particular assurance of its future development through changes in the law, particu-larly in relation to investment processes and increased decision-making powers for the transmission system operator in case of emergency situations;
■ the need to change the law on the safe functioning of the electricity system, and particularly the safety of operation of the transmission and distribution net-works. This is confirmed both by experience gained from cooperation between operators on transmission and distribution systems, and by the conclusions drawn from the large disturbances which occurred in 2006;
■ a more precise definition in the Energy Law Act of the rights and obligations of the transmission system operator in relation to establishing technical require-ments for equipment and systems operating in the transmission and distribution networks throughout the country. The transmission system operator’s power to issue binding instructions should be made sufficiently clear, so as to avoid disputes concerning areas of competence and to guarantee the safe functioning of the entire electricity system;
■ development of procedures to be followed in crisis
situations which threaten security of supply over large parts of the country. The measures currently laid down in the Energy Law Act were found to be inadequate in the light of the disturbances of June 2006;
■ strengthening of cooperation between the
transmis-sion system operator and the national authorities in case of emergency situations.
We will continue to undertake active international coop-eration regionally, bilaterally and within international TSO organizations. The main focuses of this work will be:
■ action to build new cross-border connections; ■ participation in coordinated regional planning of
trans-mission system development in order to eliminate bottlenecks in the transmission of electricity;
■ development of rules for coordinated auctions for
transmission capacity in the regional market of Central and Eastern Europe;
■ increased coordination of operational activity with
transmission system operators belonging to UCTE (the Union for the Co-ordination of Transmission of Electricity), in accordance with UCTE’s “Security Package” rules.
We must not forget even for a moment that the great-est resource of PSE-Operator S.A. is its people. It is their knowledge and skills, their consistent good work and ability to take difficult decisions to assure security of supply in Poland. For this reason we employ highly qualified personnel who are dedicated to ensuring the continuity of electricity supplies. And we do all this in accordance with our motto: Electricity in good hands. On behalf of the Management Board I would like to convey heartfelt thanks to our customers and business partners for their fruitful cooperation, and to thank all our staff for their creativity and effectiveness in carrying out the tasks entrusted to them.
Stefania Kasprzyk
Table of contents
About us
Company Bodies 9
Profile of activities 11
Organization and employees 12
The year 2006 in short
Major events and achievements of the Company 15
Data concerning operation of the Polish Power System 16
Our activities
Legal basis for activities 19
Responsibilities of the transmission system operator 20
Polish Power System 22
Network assets and related activities 26
Transmission services 31
Wholesale power market 33
Cooperation with transmission systems of other countries 34
Allocating cross-border transmission capacity 36
Activities of the Energy Accounting and Control Centre 36 Regional cooperation with transmission system operators 37 Participation in the works of international organizations of operators 39 Participation in the works of international industry organizations 41
New technologies 42
Major R & D achievements 43
Telecommunication and IT 43
Company safety issues 45
Environmental protection 46
Main goals to be achieved in 2007
49Abbreviated financial statements for 2006
50
About us
General Meeting of Shareholders
Within the period between 1 January and 30 December 2006 the only stockholder of the Company, holding 100 % of the stocks, was Polskie Sieci Elektroenergetyczne SA.
On 27 December 2006 an Extraordinary General Meeting of Shareholders of Polskie Sieci Elektroenergetyczne SA adopted a resolution on payment of dividend for the year 2005 in a mate-rial form consisting in transferring by PSE SA to the State Treasury, not later than on 31 December 2006, all the stocks of PSE-Operator S.A.
On 29 December 2006 Polskie Sieci Elektroenergetyczne SA handed over to the State Treasury the documents of all stocks of the PSE-Operator S.A. company, thus transferring their own-ership to the State Treasury, with the execution date of 31 December 2006.
From 31 December 2006 the only stockholder of the Company, holding 100 % of the stocks, has been the State Treasury.
Supervisory Board
As of 31 December 2006 the Supervisory Board dur-ing its first term of office consisted of:
Henryk Baranowski – Chairman Edward Słoma – Vice Chairman Marta Busz – Secretary Joanna Adamczyk – Member Lech Małecki – Member Piotr Nojszewski – Member Marek Pastuszko – Member
In 2006 the following changes occurred in the compo-sition of the Supervisory Board:
■ on 14 July 2006 an Extraordinary General Meeting of Stockholders of PSE-Operator S.A. dismissed Józef Sieniuć from the post of Supervisory Board Chairman and recalled him from the composition of the Supervisory Board of PSE-Operator S.A. Moreover, it recalled Jadwiga Karwatka from the composition of the Company’s Supervisory Board. At the same time it appointed Henryk Baranowski to the position of the Chairman of Supervisory Board of PSE-Operator S.A. and Lech Małecki to the position of a Member of the Company’s Supervisory Board. ■ on 4 September 2006 an Extraordinary General
Meeting of Stockholders of PSE-Operator S.A. removed Jerzy Marczak from the composition of the Company’s Supervisory Board and appointed Marek Pastuszko to the position of a Member of the Supervisory Board.
Company Bodies
10 PSE-Operator S.A. Annual Report 2006
Company Bodies
Management Board
As of 31 December 2006 the Management Board during its first term of office consisted of:
Stefania Kasprzyk – President Wojciech Kułagowski – Vice President
Till 10 November 2006 the Management Board during its first term of office consisted of:
Stefania Kasprzyk – President Wojciech Kułagowski – Vice President Jerzy Loch – Vice President
Wojciech Kułagowski – Vice President Stefania Kasprzyk – President
The main goals of the activities of PSE-Operator S.A. are:
■ to ensure safe and economic operation of the Polish Power System (PPS) in the conditions of its synchronous work within the UCTE (Union for the Co-ordination of Transmission of Electricity) con-nected transmission system;
■ allocating, on market principles, transmission capacity in cross-border exchange;
■ ensuring the necessary development of the national transmission network;
■ creation of technical and organizational infrastruc-ture necessary for functioning of the domestic wholesale electricity market;
■ preserving the financial stability of the enterprise and creating growth in the company value.
PSE-Operator S.A. provides transmission services in domestic and cross-border trade to particular users of the transmission system.
The transmission services provided in the domestic trade include in particular:
■ transmission of electrical power understood as transport of electricity with the use of the transmis-sion system;
■ maintenance of continuity and reliability of electricity supply and reception within the electricity system, as well as maintenance of quality parameters thereof;
■ conducting financial clearings resulting from imbal-ance of electrical power supplied to and received from the PPS.
The transmission services provided in the cross-border trade include in particular:
■ determining the volume of and offering cross-border transmission capacity;
■ reserving cross-border transmission capacity; ■ effecting cross-border exchange.
Profile of activities
The subject of activities of PSE-Operator S.A. is performing the tasks of a national electricity transmission system operator (TSO). The tasks and obligations of the TSO in the electricity sector in Poland are clearly defined. Legal regulations and decisions by the President of the Energy Regulatory Office (ERO) stipulate the rights and obligations, competences and tools necessary for the activities of the transmission system operator to be conducted properly.
PSE-Operator S.A. Annual Report 2006
12
Organization and employees
OrganizationIn 2006 PSE-Operator S.A. conducted its activities within the organizational structure specified in the Organizational Rules and Regulations of the Company. Management of PSE-Operator S.A. is decentralized by means of delegat-ing tasks, responsibilities and rights to the lowest possible, justified level of organization.
Organizational structure of PSE-Operator S.A. as on 31 December 2006 DEPARTAMENT INFRASTRUKTURY SIECIOWEJ DEPARTAMENT SPRZEDAŻY I ROZWOJU DEPARTAMENT ORGANIZACJI STANOWISKO DS. BHP DEPARTAMENT BEZPIECZEŃSTWA SPÓŁKI DEPARTAMENT USŁUG OPERATORSKICH BIURO KOMUNIKACJI DEPARTAMENT FINANSÓW I KONTROLINGU DEPARTAMENT TELEINFORMATYKI
ZARZ
Ą
D
MANAGEMENT
BOARD
POWER SYSTEM OPERATIONS DEPARTMENT GRID INFRASTRUCTURE DEPARTMENT SALES AND DEVELOPMENT DEPARTMENT TELECOMMUNICATIONAND IT DEPARTMENT AND SAFETY SECTIONWORK HEALTH
COMPANY SECURITY DEPARTMENT COMMUNICATION OFFICE ORGANIZATION DEPARTMENT FINANCIAL AND CONTROLLING DEPARTMENT
Organization and employees
In 2006 the continuing education program for employ-ees included conferences and seminars organized by professional educational companies, as well as organization of internal training tailored to the needs of PSE-Operator S.A. The most popular were training courses in the areas of power engineering, legal regu-lations, taxes, accounting and public procurement law. The knowledge of financial issues, labor law and management was improved as well.
The command of foreign languages was also brushed up. Training courses were attended by 117 individu-als, which accounts for 29 % of all employees. The largest group of employees took the advantage of English language courses.
In 2006 employees of PSE-Operator S.A. upgraded their knowledge also on undergraduate, graduate and post-graduate college courses. 24 individuals
management. 36 persons used the opportunity to do post-graduate studies – power engineering, finances and management were the most preferred subjects. In total 60 employees of PSE-Operator S.A. have studied, which accounts for 15 % of all employees. Seven people graduated in 2006.
The training courses organized in 2006 allowed to improve the efficiency of employees’ and teams’ work, broaden specialized knowledge and upgrade qualifications, and ensured that the employees meet the requirements set by the company and the external environment.
At the end of 2006 there were 400 individuals employed at PSE-Operator S.A. Men accounted for 64.5 % of all employees whereas women for 35.5 %. 368 employees are university graduates, which accounts for 92 % of all the employed persons. From the beginning of its activities PSE-Operator S.A. has been consistently building an organization responsible for good working and employment conditions for its employees. A special role is played by continuing education the aim of which is to provide the Company with employees having competences necessary for pursuance of the PSE-Operator S.A. development and value growth strategies.
Employees
The Management
From the left: Magdalena Wasiluk-Hassa, Bonifacy Gajewski, Małgorzata Klawe, Jacenty Węgliński, Wojciech Kułagowski, Andrzej Gajewski, Stefania Kasprzyk, Bogumił Rudnicki, Iwona Laskowska, Jerzy Dudzik, Piotr Rak, Kazimierz Żółtowski.
Major events and achievements of the Company
January■ The President of the Energy Regulatory Office (ERO) issued a decision appointing PSE-Operator S.A. as the electrical power transmission system operator for the period from 1 February 2006 till 31 December 2007 on the territory of the Republic of Poland.
May
■ The District Labor Inspectorate approved the “PSE-Operator S.A. Corporate Collective Labor Agreement” together with a salary incentives sys-tem.
■ New standards for agreements on provision of transmission services were worked out, adjusted to the stipulations of the draft of new Instruction of the Transmission System Operation and Maintenance (ITSOM).
■ A technical design of a data communications sys-tem was prepared regarding the equipment of new TSO headquarters in Bielawa and tenders were invited for an IT System for the Electricity Market.
June
■ Implementation of the Instruction of the Transmission System Operation and Maintenance (ITSOM), adjusted to the provisions of Art. 9g of the Energy Law Act (a separate part of the ITSOM concerning system balancing and system congestion management was approved by the President of the ERO).
August
■ The tender procedure for development of PCM data communications network to be used by PSE-Operator S.A. was finished and an agreement with a contractor was concluded.
September
■ A representative of PSE-Operator S.A. was appoint-ed as Vice President of UCTE (Union for the
November
■ A Memorandum formulating common goals of eight TSOs from the Central and Eastern Europe Region (Poland, Austria, the Czech Republic, two operators from Germany, Slovakia, Slovenia and Hungary) was negotiated and signed. On the basis of the aforementioned document and under the direction of the Company representative, a draft of a new flow-based capacity allocation concept of setting technical parameters under the coordinated mechanism was worked out.
■ The 1st stage of development and modernization of PCM devices, including telecommunication hubs in 44 transmission network facilities and conducted under an agreement concluded with a contractor for development of the PCM data communications network used by PSE-Operator S.A., was finished.
December
■ The President of the ERO issued a decision approv-ing the PSE-Operator S.A. tariff for the period between 1 January 2007 and 31 December 2007. ■ The “Development plan for meeting the current and
future demand for electricity in 2006 – 2020” was agreed upon with the President of the ERO. ■ All stocks of PSE-Operator S.A. were transferred by
PSE SA to the State Treasury – the condition stipu-lated in Art. 9k of the Energy Law Act was thereby fulfilled.
■ Technical designs of data communications systems were prepared regarding the equipment of new TSO headquarters in Bielawa and tenders were invited for an IT System for an Integrated Management System and a Local Area Network.
■ At the end of 2006 PSE-Operator S.A. disclosed gross profit in the amount of PLN 264.3 million. After deduction of the mandatory charges to the financial result, the net profit amounted to PLN 208.5 million.
PSE-Operator S.A. Annual Report 2006
16
■ As of 31 December 2006 the total capacity avail-able in the Polish Power System (PPS) amounted to 34,718 MW and was slightly, that is by 174 MW, higher than in the previous year.
■ At the end of 2006 the total capacity available in public thermal plants was 30,150 MW, which accounts for 87 % of total capacity available in the PPS.
■ The maximum domestic power demand occurred on 24 January 2006 during the evening peak and amounted to 24,640 MW. The minimum domestic power demand occurred on 21 May 2006 during the night off-peak period and amounted to 10,820 MW. The difference between the maximum and the mini-mum demand within the analyzed period amounted to 13,820 MW (56 % of the peak demand).
Data concerning operation
of the Polish Power System
Power demand curves for days on which the maximum and minimum domestic power demand occurred Maximum demand Minimum demand
33,3%
2,5%
1,8% 5,1%
57,3%
Elektrownie gazowe (Gas-Fired Power Stations)
Elektrownie wodne (Public Hydro power Stations)
Percentage share of particular power plant groups broken down by fuel type in domestic electricity generation in 2006
[MW]
Consecutive hour quarters in a day
Hard coal power plants Lignite power plants Gas power plants Hydro-electric power plants Industrial power plants
Data concerning operation
of the Polish Power System
80 000 90 000 100 000 110 000 120 000 130 000 140 000 150 000 160 000 170 000 198 1 198 8 198 9 199 0 199 1 199 2 199 3 199 4 199 5 199 6 199 7 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 l a t a
Krajowa produkcja energii elektrycznej
Domestic electricity generation and consumption in the years 1981 – 2006 ■ The minimum domestic power demand during
evening peaks on business days in 2006 occurred on 30 June and amounted to 17,173 MW.
■ The average monthly domestic power demand dur-ing evendur-ing peaks on business days in 2006 was higher than in all months of 2005.
■ In 2006 the total electricity generation amounted to 160,848 GWh and was higher by 3.1 % than in the previous year.
■ The domestic power consumption in 2006 amount-ed to 149,847 GWh and was higher by 3.5 % than in 2005.
■ The balance of electricity exchange effected between Poland and neighboring countries in 2006 amounted to 11,001 GWh and was lower by 1.7 % in compari-son to the previous year.
Average monthly domestic power demand during evening peaks on business days in 2006 in comparison to historical data
[MW]
[GWh]
Domestic electricity generation Domestic electricity consumption years 14 000 15 000 16 000 17 000 18 000 19 000 20 000 21 000 22 000 23 000 24 000 February January March
April May June July
August
September October November December
Our activities
Legal basis for activities
PSE-Operator S.A., as a company governed by the commercial law, operates in accordance with all the general legal regulations, and particularly with:■ the provisions of the Code of Commercial Partnerships and Companies of 15 September 2000 (Journal of Laws No. 94 item 1037, as amended); ■ the provisions of the Civil Code of 23 April 1964
(Journal of Laws No. 16 item 93, as amended); ■ the provisions of the Accounting Act of 29 September
1994 (Journal of Laws No. 76 item 694, as amend-ed).
PSE-Operator S.A., as the national transmission system operator, acts on the basis of the following regulations:
■ decision by the President of the Energy Regulatory Office No. PEE/272/4988/W/2/2004/MS of 15 April 2004 on granting to PSE-Operator S.A. a license to transmit and distribute power within the period from 1 July 2004 till 1 July 2014;
■ decision by the President of the Energy Regulatory Office No. DPE-47-3(6)/4988/2005/2006/BT of 26 January 2006 appointing PSE-Operator S.A. as the operator of the electrical power transmission sys-tem within the territory of the Republic of Poland till 31 December 2007;
■ the provisions of the Energy Law Act of 10 April 1997 (Journal of Laws of 2003, No. 153 item 1504, as amended), which takes into account the provi-sions of the Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity;
■ subordinate legislation for the Energy Law Act of 10 April 1997 (Journal of Laws of 2003, No. 153 item 1504, as amended).
PSE-Operator S.A., as a transmission system opera-tor, acts on the European electricity market pursuant the following regulations:
■ directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity; ■ regulation EC No. 1228/2003 of 26 June 2003 on
conditions for access to the network for cross-border exchanges in electricity together with the guidelines of 9 November 2006 on the manage-ment and allocation of available transfer capacity of interconnections between national systems;
■ decision No. 1229/2003/EC of the European Parliament and of the Council of 26 June 2003 lay-ing down a series of guidelines for trans-European energy networks;
■ directive 2005/89/EC of the European Parliament and of the Council of 18 January 2006 concerning measures to safeguard security of electricity supply and infrastructure investment (the SoS directive).
PSE-Operator S.A. Annual Report 2006
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Responsibilities of the transmission system operator
TSO responsibilities:
■ Taking care of the safety of electrical power supply by means of safeguarding the safety of transmis-sion system operation and proper transmistransmis-sion system capacity.
■ Dispatching of the Power System in an efficient manner, with the required reliability and quality of electricity supply ensured, and coordinating the operation of a part of the 110 kV network (the so-called coordinated 110 kV network) in cooperation with operators of distribution systems.
■ Maintenance of the transmission network, systems and devices, including connections with other elec-trical power systems, in a manner safeguarding reli-ability of the electrical power system operation. ■ Ensuring long-term capacity of the transmission
system in order to satisfy justified needs in the area of electricity transmission in domestic and cross-border trade, including the area of transmis-sion network development, and where applicable, development of connections with other electrical power systems.
■ Cooperating with other transmission system opera-tors or energy companies in order to ensure reliable and efficient operations of electrical power systems and to coordinate the development thereof.
■ Dispatching the power of generating units connect-ed to the transmission network and of generating units whose available capacity is 50 MW or higher, connected to the coordinated 110 kV network, tak-ing into account agreements with the users of the transmission system and the technical limitations of that system.
■ Managing transmission capacities connections with other electrical power systems.
■ Purchasing system services necessary for proper operation of the electrical power system, reliability of the work of that system and for maintaining the quality parameters of electricity.
■ Balancing the electrical power system, which means also balancing the current power demand with power supply in the Polish Power System, system congestion management and conducting financial clearings with the users of that system resulting from:
■ imbalance of electrical power supplied to and received from the Polish Power System,
■ system congestion management.
A transmission system operator, in accordance with the Energy Law Act, is an energy company dealing with transmission of electricity, responsible for network operations in the transmission system, current and long-term operational safety of that system, use, maintenance, overhauls and necessary development of the transmission network, including connections with other electrical power systems.
The most important domestic legal conditions for the TSO operations, as specified above, are stipulated in Art. 9c item 2 of the Energy Law Act.
Responsibilities of the transmission system operator
■ Managing flows of electrical power in thetransmis-sion system in a manner coordinated with other connected electrical power systems and, in coop-eration with operators of distribution systems, in the coordinated 110 kV network, taking into account the technical limitations of that system.
■ Purchasing electricity for covering losses in the transmission network in the course of electric-ity transmission through that network, as well as applying transparent and non-discriminating market procedures to purchases of that electricity.
■ Providing the network users and other system operators with information about the conditions of rendering electricity transmission services, includ-ing: cross-border trade, network management and electricity balancing - necessary for gaining access and use of transmission grid.
■ Preparing the configuration of the transmission net-work in reference model and, in cooperation with the operators of the electrical power distribution systems, the network configuration for the coordi-nated 110 kV network in normal state.
PSE-Operator S.A. Annual Report 2006
22
Polish Power System
PSE-Operator S.A. manages the operation of the Polish Power System (PPS) which, due to the char-acter of technical functions, can be divided into three subsystems:
■ electricity generation (in power plants, combined heat and power stations and distributed genera-tion);
■ electricity transmission through extra-high voltage network on the territory of Poland and cross-border lines;
■ distributing and supplying electricity through distri-bution networks of high, medium and low voltage (tasks fulfilled by the distribution system operators).
Extra-high voltage network
The Polish extra-high voltage network consists of net-work infrastructure consisting of following facilities: ■ 235 lines with total length of 12,941 kilometers,
of which:
■ one 750 kV line with length of 114 km, ■ sixty-seven 400 kV lines with total length of
4,919 km,
■ one hundred and sixty-seven 220 kV lines with
total length of 7,908 km,
■ 95 extra-high voltage (EHV) substations.
Cross-border connections
Cross-border exchanges of electricity are carried out through EHV connections with the electric power sys-tems of the neighboring countries.
The Polish Power System includes the following cross-border connections with the neighboring countries: ■ in the west:
■ two 400 kV double-circuit transmission lines
with the German system running from Mikułowa to Hagenwerder and from Krajnik to Vierraden (temporarily 220 kV voltage is used).
■ in the south:
■ two 400 kV lines with the Czech system, running
from Dobrzeń to Albrechtice and from Wielopole to Nošovice;
■ one 220 kV double-circuit line with the Czech
system running from Kopanina/Bujaków to Lískovec;
■ one 400 kV double-circuit line with the Slovak
system running from Krosno to Lemešany. ■ in the north:
■ a direct current cable with the Swedish system.
■ in the east:
■ one 220 kV line with the Belarusian system and
running from Białystok to Ross (presently shut down);
■ one 220 kV line with the Ukrainian system
and running from Zamość to Dobrotvinska;
■ one 750 kV line with the Ukrainian system
and running from Rzeszów to Khmelnitskaja (presently shut down).
Each electrical power system is characterized by variability of its operating conditions resulting from the variability of demand and possibilities of occurrence of random incidents. Moreover power system opera-tions are influenced by the necessity of balancing the demand which is carried on in the framework of the electricity market and with removing transmission congestion.
Polish Power System
Power balance
At the end of 2006 the total power available in PPS amounted to 34,718 MW and was higher by 174 MW in comparison to the previous year. The total power available from public thermal power plants accounted for ca. 87 % of the total power available in PPS, whereas the share of public hard coal fired power plants was dominating – 59 % in comparison to the 25 % share of public lignite fired power plants. The share of the other sources in the total power available in PPS did not exceed several per cent.
The average annual available power of domestic power plants during evening peaks on business days in 2006 amounted to 27,131 MW and was lower by more than 2.5 %, whereas the average annual power available to the TSO was lower by 3.4 % in com-parison to the year 2005. That decrease was caused mainly by extreme weather conditions in the summer
The average annual power demand amounted to 20,578 MW and was higher by ca. 4 % than in the previous year. It was the highest average annual power demand in the history of Polish power industry. The maximum power demand in 2006 reached the level of 24,640 MW. It was higher by 5 % in compari-son to the year 2005.
The highest increase in power demand in 2006 was recorded in the months when extreme weather condi-tions occurred: in January and in July by ca. 8 % in comparison to January and July 2005.
The average monthly power reserves from evening peaks on business days in 2006 available for the TSO amounted to 3,997 MW and were lower by ca. 30 % in comparison to the year 2005.
The National Transmission Grid and cross-border connections
Dobrotwór
Sweden
Belarus
Lithuania
Germany
Slovak Republic
Czech
Republic
Out of operation Khmelnitskaja Dobrotvinska Ross Power Substations DC cable 450 kV 400 kV (currently 220 kV) 400 kV (planned)PSE-Operator S.A. Annual Report 2006
24
Polish Power System
Electricity generation and consumption Gross domestic electricity generation in 2006 amount-ed to 160,848 GWh and was higher by 3.1 % in com-parison to 2005.The domestic electricity consumption in 2006 amounted to 149,847 GWh and was the highest in the history of Polish power industry, whereas in comparison to 2005 it was higher by 3.5 %.
Export of electricity in 2006 amounted to 13,442.8 GWh, of which export within trade exchange amounted to 13,434.3 GWh. In comparison to the year 2005, the export was lower by 6 %.
Total import of electricity in 2006 amounted to 2,441.7 GWh, of which commercial import amounted to 2,420.1 GWh. In comparison to the year 2005, the import was lower by 22.4 %.
* Data was not recorded in the years 2004-2005
Structure of electricity generation in domestic power plants, volumes of cross-border electricity exchanges and domestic electricity consumption in the years 2004-2006
2004 2005 2005/2004 2006 2006/2005
GWh GWh % GWh %
1. Total electricity generation 153 361 156 023 101.7 160 848 103.1
1.1 Public power plants 144 821 147 616 101.9 152 498 103.3
of which: – public hydro power plants 3 524 3 587 101.8 2 822 78.7 – public thermal power plants 141 296 144 029 101.9 149 676 103.9 of which:
– hard coal-fi red 85 370 84 614 99.1 92 111 108.9
– lignite-fi red 52 136 54 888 105.3 53 518 97.5
– gas-fi red 3 791 4 527 119.4 4 046 89.4
1.2
Power plants using the energy of wind and other renewable sources *
- - - 70
-1.3 Industrial power plants 8 540 8 407 98.4 8 280 98.5
2. Cross-border exchanges -9 292 -11 186 120.3 -11 001 98.3
Polish Power System
Voltage levels and frequencyIn the winter season of 2006 the voltage levels in the 400 and 220 kV network’s nodes kept acceptable value ranges. However, in the summer season of 2006 were lower than in the previous years. The voltage instability incident of 26 June 2006 was caused, among others, by low voltages in extra high voltage networks.
A detailed description of the course of the incident, its causes and conclusions therefrom has been presented in the “Final report on analysis of voltage incident that occurred on 26 June 2006”.
In 2006 the average annual frequency remained at the level of 50.001 Hz. The instantaneous value of maxi-mum frequency amounted to 50.623 Hz, and minimaxi-mum frequency amounted to 49.840 Hz. The maximum value occurred on 4 November 2006 in the result of a failure in the German electrical power system which resulted in short division of the UCTE system into three parts. In the consequence Polish Power System was in the part in which generated power significantly exceeded demand what resulted in a short frequency increase.
PSE-Operator S.A. Annual Report 2006
26
Network assets
PSE-Operator S.A. fulfills activities of a transmission system operator and leases network assets from PSE SA. For that purpose on 1 July 2004 an “Enterprise Lease Agreement” was concluded for an initial term of six months and after it was extended for a period of three years.
Pursuant to the said agreement PSE-Operator S.A. has been using both an organized group of material and intangible assets necessary for performing the TSO function. For the lease of the organized part of the enterprise PSE-Operator S.A. pays a lease fee calcu-lated with the use of the net transaction profit method. As of 31 December 2006 the network assets leased by PSE-Operator S.A included, among other: 235 EHV lines of total length of 12,941 km.
The assets leased from PSE SA do not include all the existing EHV substations. The year 2006 saw continua-tion of activities aimed at obtaining ownership rights to the Skawina and Ostrołęka 220 kV substations, which were conducted in cooperation with the Ministry of the Treasure.
Within the term of lease the TSO is obliged to carry out maintenance works including necessary repairs of the leased network assets and property included therein. The functioning of PSE-Operator S.A. as a national TSO who does not own transmission assets is a tem-porary solution. The strategic goal of the TSO is to acquire rights to those assets.
Maintenance and repairs
In 2006 PSE-Operator S.A. carried out works which consisted in operating and maintaining and repair-ing the facilities included in the organized part of the transmission enterprise and which influenced reliable operation of the transmission network.
The major maintenance works included:
■ visual inspections, aerial surveys and diagnostics of extra-high voltage lines with the use of aviation technology;
■ service surveys of transformers and circuit-breakers;
Network assets and related activities
■ checking the correctness of functional operation of automated safety systems;
■ obligatory activities resulting from regulations con-cerning pressure tanks, environmental protection and real estate management.
In 2006 93 repair tasks worth PLN 30.4 million were performed. The main effects of pursuing the repairs plan include:
■ 20 line-related tasks worth PLN 17.2 million and consisting in insulation replacements, foundation repairs, earthing system repairs, lightning arrester wire replacements and construction’s painting. ■ 69 substation-related tasks worth PLN 12.9 million
and consisting in repairs of primary and secondary equipment, compressed air systems, steelworks and buildings, cable channels, installations and roads. The total costs of operation and repairs amounted in 2006 to PLN 154.9 million.
Investments
In accordance with the “Agreement on investment projects management”, PSE-Operator S.A. rendered the following services for the benefit of PSE SA: ■ preparing investments for realization,
■ carrying out investment tasks.
As a part of activities preceding investment projects, documentation necessary for the decision-taking proc-ess was prepared in relation to fulfillment of, among other, the following tasks:
■ modernization of the Klikowa 220/110 kV substation, ■ modernization of the Radkowice 220/110 kV
substa-tion,
■ modernization of the Poręba 220/110 kV substation, ■ modernization of the Chełm 220/110 kV substation, ■ modernization of the Katowice 220/110 kV substation, ■ 400 and 220 kV networks interconnection at the
Byczyna substation.
Under the investment activities in 2006 the following tasks and stages of investment projects were com-pleted:
sub-PSE-Operator S.A. Annual Report 2006
28
Network assets and related activities
■ construction of the Olsztyn Mątki-Olsztyn I 220 kVline,
■ modernization of the Olsztyn I 220/110 kV substa-tion,
■ modernization of the Łośnice 220/110 kV substa-tion,
■ modernization of a 220/110 kV transformers popula-tion,
■ replacement of 220 kV circuit–breakers at the Mikułowa substation,
■ elimination of threats to provision of the transmission services at the Blachownia substation,
■ replacement of a section of the Świebodzice – Klecina 220 kV line with a double-circuit double volt-age 220 + 110 kV line,
■ improvement of the technical condition of the Krosno – Lemešany 400 kV line,
■ construction of the Tarnów – Krosno 400 kV line, ■ modernization of the Połaniec – Radkowice 220 kV
line,
■ modernization of the Chmielów – Boguchwała 220 kV line.
In relation to carrying out the investment tasks and projects included in the investment plan of PSE SA for the year 2006, investment outlays were made in the amount of PLN 450.3 million.
The results of completed investment projects In the result of the investment activities carried out for the benefit of PSE SA:
■ the transmission network was extended with:
■ 92.6 km of the 400 kV lines, ■ 252.6 km of fiber optic channels,
■ power transformation capacity was increased by 810 MVA, of which by:
■ 330 MVA 400/220 kV at the Olsztyn Mątki
sub-station,
■ 160 MVA 220/110 kV at the Konin substation, ■ 160 MVA 220/110 kV at the Wanda substation, ■ 160 MVA 220/110 kV at the Bieruń substation,
■ fixed and intangible assets of total value of PLN 401.8 million were handed over for use.
The most important effects of completed tasks ■ building of the Olsztyn system (development of the
Olsztyn Mątki 400/110 kV substation, modernization of the Olsztyn I 220/110 kV substation (1st stage) and start-up of the Olsztyn Mątki – Olsztyn I 400 kV line) supplying power to the Olsztyn agglomeration allowed to interconnect the 400 kV network with the 220 kV network, which provide additional power supply to the Olsztyn substations and improve the availability of the Gdańsk Błonia – Olsztyn Mątki 400 kV line;
■ substations were modernized for the purpose of increasing their reliability, adjusting them to new working conditions, providing remote supervision, control and monitoring, as well as automatic opera-tion of the substaopera-tion;
■ replacement of the autotransformers at EHV substa-tion increased the availability of power supply points within the perspective of the coming thirty years; ■ lines modernization eliminated network constraints
by means of increasing the transmission capacity of the lines and will contribute to improvement of operation reliability and adjustment of the technical parameters of the lines to the binding standards and regulations.
Planning activities
The following plans were prepared for the year 2007: ■ maintenance plan,
■ plan of repairs,
■ PSE SA investment plan,
■ PSE-Operator S.A. investment plan.
Works on preparation of the Investment Plan for the years 2007 – 2011 were continued.
The most important plans for the year 2007 and the following years are development of the 400 kV network, replacement of the 220 kV network with the 400 kV network, replacement of the population of transformers, voltage transformers and surge arresters, continuation of the program for safety of electrical power network operation and commence-ment of modernization of a group of power lines and
Network assets and related activities
substations. For the purposes of the aforementionedtasks a data communication network will be devel-oped together with the required applications.
An important element of the investment program will be tasks related to reactive power management including installation of shunt reactors at substations and installation of batteries of capacitors.
All the activities will be coordinated with investment plans of entities dealing with power generation and of distribution system operators.
Taking into account the tasks and the investment projects included in the binding medium-term plan for the years 2006-2010, as well as the prepared pre-liminary list of tasks to be included in the next issue of the plan for the years 2007-2011, the necessary expenditures to be made within a period of five years may be estimated as PLN 3 – 3.5 billion.
PSE-Operator S.A. Annual Report 2006
30
In 2006 PSE-Operator S.A. aimed at introducing amendments to legal regulations which render fulfill-ment of its statutory obligations difficult. The company proposed amendments to the following legal acts: ■ the Act of 27 March 2003 on Land Planning and
Development (Journal of Laws No. 80, item 717) – amendment to the stipulations which would allow to introduce to local land development plans line facili-ties provided for in the Development Plans agreed upon with the President of the ERO;
■ the Act of 17 June 1966 on Enforcement Proceedings in Administration (Journal of Laws of 2005, No. 229 item 1954, as amended) – introduction of an administrative proceeding path facilitating entry into real estate in order to perform necessary operating activities or remove results of a failure (changes are necessary due to the rights of real estate owners hindering or sometimes even preventing quick and efficient removal of effects of line facilities failures);
■ the Civil Code of 23 April 1964 (Journal of Laws No. 16 item 93, as amended) – an amendment allowing legal persons created by line investors to acquire the real estate easement;
■ the Criminal Code of 6 June 1997 (Journal of Laws No. 88 item 553) – amendments to the Criminal Code provisions concerning offences resulting in a probable failure in utilities (electricity, gas, heat, fuels and water) supply to local community centers or to large areas of the country;
■ the Act of 21 August 1997 on Real Estate Management (Journal of Laws of 2004, No. 261 item 2603 and No. 281 item 2782) – amendments designed to facilitate obtaining administrative deci-sions on restricting the manner of use and on restricting the amount of financial claims from own-ers only to the damages paid.
Timely pursuance of the investment plans depends on the prevailing formal and legal conditions. Acquisition of the “right of way” is a complicated and time-consuming task. Within the recent period the duration of the process of preparing and carrying out projects concerning EHV lines has increased to between ten and twenty years. If new legal solutions concerning infrastructural projects and simplifying the process of making arrangements with local governments and land owners are not adopted, pursuance of the PSE-Operator S.A. investment plans will be significantly hindered.
Sales of electricity transmission services constitute the main source of revenues of PSE-Operator S.A. from its activities.The company provides electricity transmission services on the basis of contracts for provision of the said services, on the conditions stipulated in the Instruction of the Transmission System Operation and Maintenance and on the basis of the TSO’s tariff for electricity approved by the President of the ERO.
Transmission services
In 2006, on the basis of concluded contracts, PSE-Operator S.A. provided transmission services to: ■ 13 power plants,
■ 6 combined heat and power plants, ■ 15 distribution system operators, ■ 3 end customers,
■ 43 trading enterprises.
The year 2006 saw conclusion of transmission con-tracts between PSE-Operator S.A. and 7 new custom-ers – trading enterprises.
As the new Instruction of the Transmission System Operation and Maintenance came into force on
1 June 2006, draft contracts for provision of electricity transmission services were prepared and sent to the TSO customers.
Connecting services
Activities related to connecting entities to the Polish Power System concern two areas. The first one is connecting to the transmission network. In this area PSE-Operator S.A. established in 2006 connecting conditions:
■ for generating entities for total power of 309 MW; ■ for distribution companies for total power of 320 MW.
PSE-Operator S.A. Annual Report 2006
32
Transmission services
The second area concerns arrangement of the connecting conditions for entities to be connected to the 110 kV distribution network. In this area PSE-Operator S.A. arranged in 2006 connecting conditions:■ for generating entities for total power of 795.5 MW; of which wind farms accounted for 708 MW; ■ for customers for total power of 174 MW. Tariff
Settlements of the transmission services provid-ed by PSE-Operator S.A. within the period from 1 January 2006 till 31 December 2006 were conduct-ed in accordance with the tariff of PSE-Operator S.A. approved by the President of the Energy Regulatory Office (President of the ERO) on 14 December 2005. On 15 December 2006 the President of the ERO issued a decision approving the tariff of PSE-Operator S.A. for the following year. The tariff came into force and has been applied in settlements of the provided transmission services since 1 January 2007.
Tariff activities
PSE-Operator S.A. provides services to particular entities included in the PPS in the area of:
■ electricity transmission through the transmission grid – service provided for the benefit of entities connected to the transmission grid. In order to pro-vide it, PSE-Operator S.A. handles the following:
■ operations and network assets maintenance; ■ power contracting for the needs of balance
differ-ences in the transmission network;
■ contracting of transmission services in the net-works belonging to other entities;
■ ensuring reliability of electricity supply, proper quality parameters of supplies, meeting the UCTE requirements for cross-border exchanges, appro-priate generating capacities at the PPS in a long-term perspective and stimulating activities aimed at decreasing the negative impact of electricity generation on the environment;
■ conducting settlements arising from imbalance of electricity supplied to and received from the system for entities using the balancing market.
In order to provide services, PSE-Operator S.A. car-ries out, amongst others, the following activities: ■ contracting and monitoring of power reserves
(con-trol system services) and additional services from the administrator of long-term contracts;
■ contracting the reliability must-run generation; ■ balancing power generation with demand reported
by market participants on the day-ahead hourly balancing market and conducting settlements of deviations from the reported schedules (for that purpose PSE-Operator S.A. creates and conducts maintenance of balancing and settling systems);
■ clearing compensation charges within the system of cross-border transmission services, that consist in mutual coverage of power transit costs by transmis-sion network operators within a uniform European system, together with simultaneous transfer of the financial results of those settlements in the opera-tors’ tariffs in particular countries;
■ connecting entities to the EHV network (for the purposes of providing those services PSE-Operator S.A. established conditions and constructed con-nections).
Transmission services
Wholesale power market
PSE-Operator S.A. as the entity responsible for managing the Polish Power System, ensures its safe and reliable operation by means of providing balancing services to the electricity market participants, and administers the balancing and the technical markets.
The balancing market (BM)
As of the end of 2006, 78 entities participated in the bal-ancing market processes, of which: 19 generating enti-ties, 17 customers, 40 trading enterprises, Towarowa Giełda Energii SA and PSE-Operator S.A. as the TSO. Technical and commercial data were submitted by 39 market operators and concerned 317 BM units.
In 2006 the market participants supplied 11.4 TWh of the balancing power to the balancing market.
Technical market
In 2006 the purchases of control system services and generating units availability services were effected on the basis of bilateral agreements with suppliers concluded after prior proceeding for granting a public
procurement contract. Control system services were purchased from thermal power plants for PLN 573 mil-lion. As regards hydro-electric power plants, system services worth PLN 203.7 million were purchased. Moreover, availability services were purchased from thermal power plants operating in the conditions of reli-ability must-run generation for an amount of PLN 124.3 million.
Coordination services
Within provision of coordination services supporting the commercial activities on the electricity market, annual, monthly and daily coordination planning was done.
PSE-Operator S.A. Annual Report 2006
34
UCTE, as the only association of transmission system operators in Europe, worked out and implemented the so-called “Security Package”. It consists of three elements:
■ the UCTE Operation Handbook concerning coordi-nation of activities, uniform rules of operation and information exchange;
■ the Multilateral Agreement between all the TSOs belonging to UCTE, valid from 1 July 2005;
■ procedures of monitoring the degree of fulfilling the requirements stipulated in the UCTE Operation Handbook.
Synchronous operation within UCTE increases safety of system management, whereas in emergency situ-ations it allows to obtain assistance from other UCTE members and creates more favorable conditions for cross-border exchanges, provided that transmission congestions arising from the physical nature of the
electrical power system are eliminated.
The European electrical power system operates in conditions which are substantially different from those for which it was designed. This results mainly from the continuing development of electricity market, which causes intensification of cross-border transmission and occurrence of long-distance transmissions, and from development of energy generation sources of variable characteristics, which are, for example, wind power plants. Those factors make ensure safe opera-tion of the transmission system an increasing chal-lenge for the transmission system operators.
Means which facilitate actions taken by operator in emergency situations are contracts stipulating the rules of mutual assistance. PSE-Operator S.A. signed the first bilateral general contract with the operator of the Czech transmission system ČEPS, a.s. in the year 2005. In 2006 the PSE-Operator S.A. company
Cooperation with transmission
systems of other countries
Development of balancing mechanismsOn 1 June 2006 changes were introduced in the rules of balancing market operations. Their aim was to eliminate the observed irregularities concerning settlements for planned balancing power and to allow the customers entitled to use the TPA to participate more freely in the wholesale electricity market. The changes concerned mainly:
■ introduction of joint settlement of generating BM units within the area of planned balancing power, ■ modification of the rules for setting the adjustment
settlement price CRK (including the maximum price of reliability must-run generation CWmax),
■ modification of the settlement rules concerning pur-chases of energy in emergency situations,
■ introduction of settlements for power arising from power plant constraints,
■ modification of the rules for setting spread prices, ■ abandonment of the application of imbalance
insensibility area,
■ introduction of group commercial balancing, ■ improvement in the precision of offers.
Wholesale power market
The Polish transmission system managed by PSE-Operator S.A. is a part of the UCTE system – Union for the Co-ordination of Transmission of Electricity – the largest European group of electrical power systems operating synchronously. Safe and reliable operation of the UCTE system ensures supply of electricity to more than 450 million citizens of the European countries.
Cooperation with transmission
systems of other countries
concluded further two General Contracts for Emergency Deliveries: with the operator of the system in eastern Germany – Vattenfall Europe – Transmission GmbH and with the operator of the Slovakian system – Slovenská elektrizačná prenosová sústava, a.s. In total, as of the end of 2006 there were three general contracts concluded between PSE-Operator S.A. and all the neighboring systems operating synchronously. In 2006 several serious system disturbances occurred in the European electrical power systems. The most serious one was the failure that occurred in the UCTE system on 4 November 2006. In the result of that event the UCTE system was divided into three areas working asynchronously and 15 million customers lost power. The Polish system was included in the surplus area where the frequency remained for ca. 40 minutes on a level much higher than the nominal value. The drastic change in power flows caused by the failure led to overload of network elements near the border
between Poland, the Czech Republic and Germany. The operating conditions of the UCTE systems were restored to normal status after ca. two hours.
On 25 July 2006 a serious failure occurred in the Czech system, which resulted in isolation of internal islands, and system imbalance reached 2,500 MW causing a deviation of the system frequency by ca. 140 mHz. Thanks to emergency deliveries from the Polish system – 300 MW, the Slovakian system – 150 MW, the German systems – 500 MW and assistance from the French system, control over the situation was regained and the frequency returned to a value close to the nominal one.
On 26 June 2006 a voltage incident of local character occurred in Poland. In its aftermath extremely low voltage occurred at customers side in the central and north parts of the country, and for the purposes of incident removal power supply limitations of ca. 100 MW had to be introduced.
PSE-Operator S.A. Annual Report 2006
36
Allocating cross-border transmission capacity
The year 2006 saw continuation of coordinatedauc-tions of cross-border transmission capacities held by five transmission system operators from Poland (PSE-Operator S.A.), the Czech Republic (ČEPS), Germany (VE-T and E.ON) and Slovakia (ŠEPS). Coordinated auctions between operators were the only project of that type in Europe as regards the number of opera-tors involved.
At the same time works were continued on changes in the rules of auctions for 2007. In September 2006 the transmission system operators submitted to the regu-latory bodies a draft of an “Agreement concerning the organization of a participation in co-ordinated auc-tions of transmission capacity at the common borders in 2007” accompanied by “Rules of coordinated auc-tions of cross-border transmission capacity in 2007” constituting an attachment to the Agreement. It is an update to the agreement binding in 2006. The most significant changes provided for in that agree-ment include:
■ introduction of an electronic system of bidding in monthly auctions,
■ introduction of an electronic transfer of transmission capacity,
■ changes in fees for holding auctions in relation to outlays on modernization of the e-Trace system. In the result of the solutions worked out and of arrangements made, on 21 November 2006 an auc-tion for annual cross-border exchange transmission capacity for the year 2007 was ended. It’s results were published on 22 November 2006.
Cross-Border Trade (CBT)
In 2005 PSE-Operator S.A. signed a multilateral CBT Clearing and Settlement Contract between the opera-tors on the basis of which it participated in 2006 in settlements of costs of electricity transits between the European TSOs. The aim of the aforementioned mechanism is to make sure that there are no addition-al, special border fees in the European Union Member States for export, import and transit of energy paid directly by market participants, and that settlements are only made directly between the TSOs and the costs are transferred within national tariffs. The con-tract referred to above was signed by operators from 20 countries for a year. PSE-Operator S.A. included the costs incurred in relation thereto in its tariff binding for the year 2006.
The work of the Energy Accounting and Control Centre (EACC) was performed in 2006 in the correct manner, with all the time limits and procedures binding in coop-eration with the Coordination Center for the northern part of the UCTE systems in Brauweiler (Germany) being observed.
The basic tasks of the EACC include control of the international exchange between the common block and neighboring systems within UCTE, planning oper-ation of systems, as well as registering and settling unplanned power exchanges. At the EACC current
and periodical analyses of the work of partner systems belonging to the common control block, including the Bursztyn Island, are prepared. The analyses are based on UCTE recommendations and on methodology pre-pared at the EACC and taking into account the said recommendations.
The common control block operated in 2006 within the range of ± 80 MWh/h for 97.5 % of all the time. The control deviation of the block with the frequency adjustment taken into account fell within the range of ± 80 MWh/h for 99.69 % of all the time.
Activities of the Energy
Regional cooperation
with transmission system operators
Having made a critical assessment of the works advancement achieved in 2005 in the result of activi-ties conducted by regional minifora, the European Regulators’ Group for Electricity and Gas (ERGEG) commenced public consultations in order to deter-mine the effective working structure for further works on creation of regional markets. In February 2006 the ERGEG launched the so-called Electricity Regional Initiative (ERI) aimed at:
■ establishing regional electricity markets, ■ identifying and publishing priority areas, ■ working out and publishing action schedules, ■ indicating the bodies that should take action, ■ monitoring the advancement of works.
Under the ERI seven projects concerning regional electricity markets were launched.
In accordance with that concept the Polish electricity market constitutes a part of the Central and Eastern Europe Market consisting of the markets of the Czech Republic, Hungary, Slovakia, Austria, Slovenia and a part of the German market. Eight operators from those countries started cooperation already in 2004. Those are: Verbund-APG, ČEPS a.s., MAVIR, ELES, E. ON Netz GmbH, Vattenfall Europe - Transmission GmbH and SEPS a.s.
In 2006 a Memorandum formulating common goals of the TSOs was signed. The goals include: working out a coordinated mechanism of transmission congestion management in cross-border exchange and allocating transmission capacity to entities participating in elec-tricity trade, as well as establishing an independent Auction Office.
Development of regional electricity markets was a top priority for the European Commission in 2006. The Commission recognized a need to build a uniform electricity market by means of creating and then merging regional markets.
PSE-Operator S.A. Annual Report 2006
38
Regional cooperation
with transmission system operators
Installed Capacity: Peak Demand: Energy Consumption: Population: Installed Capacity: Peak Demand: Energy Consumption: Population: Installed Capacity: Peak Demand: Energy Consumption: Population: Installed Capacity: Peak Demand: Energy Consumption: Population:
Synchronous areas in Europe AC cable
The aim of the common works is to implement the new concept of allocating transmission capacity based on physical flows.
New solutions are discussed with regulators within the ERI structures. Their implementation by the TSOs will depend on final acceptance by the Regional Coordination Committee within the ERI structure.
UCTE
From 15 September 2006 a representative of PSE-Operator S.A. has been acting as the Vice-President of the Union for the Co-ordination of Transmission of Electricity (UCTE). Election of our representative for such a post of eminence at UCTE is a sign of appre-ciation for the Polish transmission system operator. In 2006 PSE-Operator S.A. had at its disposal the fifth voting power (29 votes from the total number of 637 votes) at the General Meeting of UCTE after Germany, France, Italy and Spain.
In the first half of 2006 the structure of working groups that had been used within the several previous years functioned at UCTE. In the second half of 2006 a new working structure was introduced based on com-petence centers and including supporting working groups and project groups. PSE-Operator S.A. has
its representatives in all cells of the new structures, including chairmanship of an important group that monitors compliance with the standards specified in the UCTE Operation Handbook.
Experts from PSE-Operator S.A. participated also in the works of dedicated task forces appointed for resolving current technical problems.
Due to the serious disturbances in the UCTE system that occurred on 4 November 2006, the management body of UCTE established an Investigation Committee which task was to analyze the causes of the failure and to prepare recommendations for the future. The head of one of the three working groups (in accord-ance with the separated areas) was a representa-tive of Power System Operations Department from PSE-Operator S.A.
