New Year – new tariffs. GNERC has announced new tariffs for certain HPPs and TPPs, as well as for commercial users of Telasi and Energo-Pro; residential tariffs remain unchanged in 2017.
Enguri and Vardnili tariffs were revised for the first time since 2006. The tariff was increased to 1.496 tetri/kWh (from 1.187 tetri) for Enguri and to 2.88 tetri/kWh (from 1.17 tetri) for Vardnili. Enguri and Vardnili are the largest state-owned HPPs, generating 38.9% of total and 51.7% of hydro generation, on average. Tariffs were revised for ten other HPPs (all owned by Energo-Pro), which together accounted for 18.1% of total generation in 11M16. Only one of them got a tariff increase, while tariffs were lowered by 12.5%, on average, for the remainder.
Tariffs were revised upward for all TPPs for the year 2017. Revisions varied from a 13.5% increase for the Gardabani CCGT to a 66.9% increase for GPower. The highest tariff (14.234 tetri/kWh) was received by Blocks 3 and 4, owned by Georgian International Energy Corporation Ltd (GIEC). According to Market Rules, this tariff is the new balancing electricity price that deregulated power plants will receive for electricity sold to ESCO without a contract September through April. The guaranteed capacity fee, received by TPPs for the number of days they are on standby, was decreased for Block 3 (-23.8%), Block 4 (-30.6%), and the Gardabani CCGT (-6.1%), while it was increased for Block 9 (+10.5%) and GPower (+1.4%). The guaranteed capacity payments are collected by ESCO from all consumers and exporters in proportion to their consumption or export.
Domestic consumption increased 11.5% y/y in November 2016, with Telasi and other DNOs driving the growth. DNO consumption was up 14.0% y/y, with the greater Tbilisi area (Telasi subscribers) posting an outsized 21.5% y/y growth rate. Usage of Energo-Pro subscribers was up 10.3% y/y, while Kakheti Energy Distribution usage was up 5.9% y/y. Consumption of the Abkhazian region was up 10.4% y/y, following a 20.8% y/y increase in October 2016. Eligible consumer usage was down 4.3% y/y from an already very low base in November 2015 (-32.7% y/y). Consumption by Georgian Manganese, the largest direct consumer (73.9% of direct consumption), was up 1.7% y/y from the November 2015 low base (-35.7 % y/y). Consumption by GWP, the second-largest direct consumer (24.8% of direct consumption), declined 6.3% y/y.
Domestic consumption needs were met almost entirely by domestic generation in November 2016. Imports accounted for a mere 1.3% of total electricity supplied to the grid. The newly commissioned wind power plant generated 1.8gWh, accounting for 0.2% of total electricity supplied to the grid. Total generation increased 17.9% y/y, with HPP generation up 17.0% y/y (63.5% of total) and TPP generation up 18.9% y/y (35.0% of total). The main drivers of the increase in hydro generation were Enguri and Vardnili (+43.3% y/y). Electricity imports in November 2016 were down 84.8% y/y to 12.7gWh, with 76.4% coming from Azerbaijan and the rest from Russia. The GC fee was down 5.4% y/y to USc 0.8/kWh. Guaranteed capacity was provided by each of the five guaranteed capacity sources for most of the month. Mtkvari Energy and Gardabani CCGT operated at full power for the whole month, while Blocks 3 and 4 and GPower were mainly providing reserve for the system.
Wholesale market prices in Georgia decreased 21.2% y/y to USc 4.3/kWh, 9.0% below the Turkish market clearing price in November 2016. Turkish electricity prices decreased 0.2% y/y to USc 4.7/kWh from a significantly low base in November 2015 (-42.4% y/y). 16.2% of total electricity supplied to the grid in November 2016 was traded through the market operator, with the rest traded through bilateral contracts.
