DRAVA, KUPA, RJE»INA, LOKVARKA, LI»ANKA LIKA, DOBRA ...

HEP ANNUAL REPORT 2010
70
CHAPTER 6 - FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS OF THE HEP GROUP
FOR THE YEAR ENDED 31 DECEMBER 2010
1. GENERAL
Hrvatska elektroprivreda Group (the ‘Group’) consists of the parent company Hrvatska elektroprivreda d.d., Zagreb
(‘HEP d.d.’ or the ‘Company’) and the subsidiaries listed in Note 36.
HEP d.d. is registered in Zagreb, Ulica grada Vukovara 37. The principal activities of the HEP Group are the
generation, transmission and distribution of electricity, and the control of the electric power systems. In addition to
these main activities, the HEP Group deals with the generation and distribution of thermal power through the district
heating systems in Zagreb and Osijek, and the distribution of gas in Osijek and Đakovo.
All the Group’s activities are governed by applicable laws, regulations and decisions issued by the Croatian
Government.
At 31 December 2010, the number of staff employed by the Group was 13,990 (31 December 2009:
14,197).
These financial statements are presented in Croatian Kuna (HRK) since that is the currency in which the majority
of the Group’s transactions are denominated.
ENERGY LAWS
On 3 December 2004, the Croatian Parliament ratified the amendments to the following laws: The Energy Law, the
Law on Electricity Market and the Law on the Regulation of Energy Activities.
HEP d.d. and its subsidiaries continue to provide their services as regulated public services as follows:
electricity generation for tariff-based customers, electricity transmission, electricity distribution and electricity
supply for tariff-based customers.
Generation and supply of electricity for eligible customers, (eligibility as described by the group of tariff laws)
and trading on the energy market are performed as market activities.
The supply of electricity to eligible customers is performed according to rules governing market relations,
which allow negotiating electricity quantities and prices on a free-market basis. Electricity for households and those
preferential customers that have not exercised their right to select the electricity supplier or are left without a supplier
is supplied as part of the system of obligatory public services.
In June 2008, the Government of the Republic of Croatia promulgated a Decision on The Electricity Generation
Tariff Model, with the exemption of eligible customers, with no tariff item amounts; The Electricity Transmission
Tariff Model, with no tariff item amounts; The Electricity Distribution Tariff Model, with no tariff amounts; and the
Electricity Supply Tariff Model, with the exemption of eligible customers, with no tariff amounts. The Group has been
applying the tariff models since 1 July 2008.
In December 2008, the Law on the Amendments to the Electricity Market Law became effective, under which
small customers were obliged to choose their supplier and sign a contract with that chosen supplier by 30 June 2009,
which is the date until which they are entitled to receive energy supplied by suppliers of tariff customers.
Small customers failing to select their electricity supplier until the given date will be charged for the supply
of electricity based on the balancing electricity price charged to customers who have not selected their supplier
either.
According to the new laws, HEP d.d. restructured its operations, by forming separate companies for electricity
generation, transmission of electricity, distribution of electricity, electricity supply and electricity trading. HEP d.d.
has restructured the Group in accordance with the amended laws.
LAW ON THE PRIVATISATION OF HEP d.d.
The Law on the Privatisation of Hrvatska Elektroprivreda d.d. was passed on 25 March 2002. On 5 February 2010
this law was annulled as the Government passed the Law on Invalidity of the Law on the Privatization of Hrvatska
elektroprivreda d.d.