Practice tip

It is recommended harmonising the relevant terms of a lease contract in order to avoid any future dispute with the tenant regarding electricity invoicing and to rule out any potential misuse of the internal private line by the tenants.

New Rules on Electricity Forwarding in Hungary

The Hungarian electricity act regulates the use of internal private lines within one’s own property (such as shopping malls, office buildings and industrial parks), as well as the electricity forwarding to individual measuring devices (i.e. end-customers connected to that private line).

Since the majority of Hungarian shopping malls, office buildings and industrial parks forward electricity in their own property to the tenants and thus such are deemed private network operators, the underlying regulation as effective from 1 January 2012 may impose material effects onto currently implemented operational and commercial structures.

The new regime comes down to:

  • Even if the operation of the internal private line itself does not qualify as a licensed activity under the electricity act, rules of the electricity act on both the
    (i) agreements on the use of the internal private line; and
    (ii) regulations relating to the electricity forwarding therethrough must be applied.
  • If an end-customer is connected to an internal private line, a contract on the term of using of that internal private line must be concluded by the internal private line operator with the end-customers supplied via the internal private line. The conclusion of this contract is mandatory even if there is no electricity forwarding provided by the private network operator, e.g. if the end-customers are supplied by third party electricity providers directly, instead of the private network operator. Accordingly, line services must be provided by the private network operator even if the network operator is not the electricity supplier of the end-customer.
  • The private network operator must provide line services to the end-customer for a reasonable, cost based fee. If the parties do not agree otherwise, the fee should be based on the certified costs of the line service (like operation cost, cost of network losses) and the capital (i.e. investment) cost thereof, applied to the asset value of the operated line. The calculation methodology has been published by the Hungarian Energy Office. The electricity forwarding by the private network operator does not qualify as electricity trading by the private network operator if the average price of the electricity supplied to the end-customers does not exceed the average price of the electricity purchased by the private network operator from third party providers in the same financial year.
  • In the event that the internal network operator does not comply with the relevant laws, the Hungarian Energy Office may impose penalties in the maximum amount of HUF 100 Million (approx. EUR 350,000).

Author

László Kenyeres

Partner
Hungary