GNERC has set tariffs for TPPs, regulated HPPs, transmission companies, and distribution licensees. Tariff changes go into effect January 1, 2018. Prior to setting the tariffs, GNERC approved the regulated companies’ investment plans for the corresponding period, as dictated by the tariff methodology. Investment plans for distribution licensees – Telasi and Energo-Pro – are approved at GEL 66.2mn and GEL 278.4mn, respectively, for 2017-2019. As a result, the tariffs will increase by 1.56 tetri/kWh for Telasi subscribers and 1.28 tetri/kWh for Energo-pro consumers, on average, for 2018-2020.
Enguri and Vardnili tariffs are set until the end of 2020. Enguri and Vardnili HPPs will invest GEL 94.3mn and GEL 37.6mn, respectively, over 2017-2019, causing increases in their tariffs to 1.818 tetri/kWh (+21.5%) for the former and 4.002 tetri/kWh (+39.0%) for the latter. The three-year rehabilitation plan for Enguri involves the closure of Enguri for three to six months in spring 2019, along with other rehabilitation works during 2018-2020. According to the market rules, the Enguri tariff is the new balancing electricity price that deregulated power plants will receive for electricity sold to ESCO without a contract May through August. Notably, Enguri and Vardnili HPPs generated one third (33.9%) of total electricity supplied to the grid in 11M17.
Tariffs were revised for five other HPPs, all owned by Energo-Pro. Only Dzevruli HPP got a tariff decrease (-24.1%). Tariffs were increased for the other four HPPs by 0.5 tetri/kWh, on average. The tariffs will allow a reasonable return on investments amounting to GEL 43.6mn over 2017-2019. Regulated HPPs of Energo-Pro Georgia accounted for 10.2% of total generation in 11M17. Another five of Energo-Pro’s HPPs, with total installed capacity of 118.8MW, will become deregulated as of January 1, 2018, as the deregulation threshold increases from the current 13MW to 40MW, per recent changes in the Law on Electricity and Natural Gas.
Exporters will no longer pay an extra charge for transmission. Exporters used to pay a transmission fee to Energo-Trans (0.496 tetri/kWh in 2017) in addition to other transmission fees payable by direct consumers and distribution licensees in proportion to their consumption. The differentiated tariff for Energo-Trans is eliminated and a unified tariff set at 0.38 tetri/kWh until end-2020. Transmission fees for the other two transmission licensees, SakRusEnergo and GSE, were also increased to 0.278 tetri/kWh (+54.4%) and 1.323 tetri/kWh (+51.7%), respectively. The dispatch fee for GSE will increase to 0.092 tetri/kWh (+12.2%) through May 1, 2018 and 0.412 tetri/kWh thereafter. The total transmission and dispatch fee will amount to 2.393 tetri/kWh to cover GEL 596.6mn of investments in the rehabilitation of the transmission grid over 2016-2020.
TPP tariffs have also been revised for 2018, both for electricity generated (tetri/kWh) and guaranteed capacity. Tariffs were lowered 1.5% and 0.5% for GPower and Gardabani CCGT, respectively. Tariffs for the other TPPs were increased by 3.8% on average. The guaranteed capacity fee was raised for Gardabani CCGT (+11.6%), GPower (+6.2%), Block 3 (+6.4%), and Block 4 (+11.0%) and lowered for Mtkvari Energy (-10.0%).
Domestic consumption increased 6.7% y/y in November 2017 and 8.6% y/y in 11M17. The growth in November was driven by 6.0% y/y growth in consumption of distribution companies and a 31.9% y/y increase in direct consumption, largely driven by 48.2% y/y growth in Georgian Manganese usage. Consumption by Energo-Pro Georgia subscribers increased 9.9% y/y, while Telasi consumption was down 0.7% y/y. The Abkhazian region’s electricity usage was down 1.1% y/y, accounting for 18.8% of domestic consumption and 75.6% of electricity generated by Enguri/Vardnili HPPs.
Growth in demand was met by electricity imports from Azerbaijan (48.7%), Russia (46.5%), and Armenia (4.8%). Electricity import increased 8.7 times y/y to 110.2 GWh, or 10.2% of total electricity supplied to the grid in November 2017. Notably, electricity import was 4.2% below the planned level. Domestic generation was roughly flat, with HPP generation up 2.5% y/y (61.1% of total) and TPP generation down 14.2% y/y (28.2% of total). The wind power plant accounted for the remaining 0.5% of electricity supply.
