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Croatia Croatian Energy Regulatory Agency *P/123290* Republic of Croatia Croatian Energy Regulatory Agency ANNUAL REPORT 2018 Zagreb, June 2019 CROATIAN ENERGY REGULATORY AGENCY ANNUAL REPORT 2018 Annual Report on the Activities of the Croatian Energy Regulatory Agency 2018 TABLE OF CONTENTS 1 INTRODUCTION .............................................................................................................................. 3 2 OVERVIEW OF THE ENERGY SECTOR ................................................................................................ 6 2.1 Electricity .............................................................................................................................. 6 2.2 Natural gas .......................................................................................................................... 10 2.3 Oil, petroleum products, and biofuels .................................................................................. 13 2.4 Thermal energy ................................................................................................................... 14 3 HERA’S ORGANISATIONAL STRUCTURE, POWERS AND ACTIVITIES .................................................. 16 3.1 Organisation........................................................................................................................ 16 3.2 Legal framework .................................................................................................................. 17 3.3 Activities ............................................................................................................................. 18 3.4 A general overview of HERA’s activities and operations in 2018 ............................................ 21 3.4.1 Consumer protection ......................................................................................................................... 21 3.4.2 Electricity 21 3.4.3 Natural gas ......................................................................................................................................... 25 3.4.4 Oil and petroleum products ............................................................................................................... 27 3.4.5 Biofuels…….. ....................................................................................................................................... 27 3.4.6 Thermal energy .................................................................................................................................. 27 3.4.7 International cooperation .................................................................................................................. 28 3.4.8 REMIT…………………………………………………………………………………………… ................................................. 30 3.4.9 Council for Regulatory Affairs and Consumer Protection .................................................................. 30 4 ELECTRICITY .................................................................................................................................. 32 4.1 Significant events on the electricity market .......................................................................... 32 4.2 Regulated network activities in the electricity sector ............................................................ 35 4.2.1 Transmission and distribution system ............................................................................................... 35 4.2.2 Losses in the transmission and distribution networks....................................................................... 36 4.2.3 Development plans for transmission and distribution networks ...................................................... 40 4.2.4 Tariffs for transmission and distribution network usage and connection charges ........................... 42 4.2.5 Unbundling of activities ..................................................................................................................... 44 4.3 Wholesale electricity market ............................................................................................... 47 4.3.1 Development of the wholesale electricity market ............................................................................ 47 4.3.2 Allocation of cross-zonal capacities and congestion management ................................................... 50 4.3.3 Electric power system balancing and ancillary services .................................................................... 53 4.4 Retail electricity market ....................................................................................................... 55 4.4.1 Basic features of electricity consumption .......................................................................................... 55 4.4.2 Development of the retail electricity market .................................................................................... 57 4.4.3 Electricity prices for end consumers .................................................................................................. 59 4.4.4 Quality of electricity supply ............................................................................................................... 62 4.4.5 Consumer protection ......................................................................................................................... 68 4.4.6 Guarantee of origin ............................................................................................................................ 72 4.5 Security of electricity supply ................................................................................................ 74 4.6 Incentives for electricity production from renewable sources and cogeneration .................... 77 4.7 Energy efficiency in the electricity sector .............................................................................. 84 -1- Annual Report on the Activities of the Croatian Energy Regulatory Agency 2018 5 NATURAL GAS ............................................................................................................................... 87 5.1 Legal framework for natural gas ........................................................................................... 87 5.1.1 By-laws adopted for natural gas ........................................................................................................ 88 5.2 Regulated activities in the natural gas sector ........................................................................ 92 5.2.1 Gas transmission ................................................................................................................................ 92 5.2.2 Management of the liquefied natural gas terminal ........................................................................... 97 5.2.3 Gas storage ........................................................................................................................................ 98 5.2.4 Gas distribution ............................................................................................................................... 100 5.2.5 Public service in the gas sector ........................................................................................................ 103 5.2.6 Energy entities in the gas sector and energy activities .................................................................... 104 5.3 Natural gas market ............................................................................................................ 106 5.3.1 Wholesale natural gas market ......................................................................................................... 106 5.3.2 Retail natural gas market ................................................................................................................. 109 5.3.3 Prices of natural gas ......................................................................................................................... 113 5.3.4 Quality of gas supply ........................................................................................................................ 120 5.3.5 Consumer protection ....................................................................................................................... 122 5.4 Security of natural gas supply ............................................................................................ 123 6 OIL AND PETROLEUM PRODUCTS ................................................................................................ 125 6.1 Legal framework for oil and petroleum products ................................................................ 125 6.2 Oil transportation through pipelines ................................................................................. 125 6.3 Development of the oil and petroleum products market .................................................... 127 6.3.1 Storage of oil and petroleum products ............................................................................................ 127 6.3.2 Production of crude oil and petroleum products; trade in petroleum products............................. 128 6.4 Secure supply of oil and petroleum products ...................................................................... 130 7 BIOFUELS .................................................................................................................................... 132 7.1 Legal framework for biofuels ............................................................................................. 132 7.2 Development of the biofuels market
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