The specific objective of the project is to contribute to the alignment of policy enforcement, monitoring and harmonization of the Serbian legislation with the EU Energy Acquis. The project aims to ensure that the regulatory policies, mechanisms and operational practices will be implemented in compliance with the best regulatory practices and applicable provisions of the Energy Community law comprising the 3rd Package of EU Internal Energy Market legislation, the Infrastructure Package and applicable Network Codes.
- Policy enforcement, monitoring and harmonization of national legislation with the EU Energy Acquis
- Competitiveness on electricity market based on non-discrimination, publicity and transparency;
- Protection of energy and energy products customers;
- Development of electricity and natural gas market and their connection with the single EU energy market.
During the second quarter of 2019, project activities were focused on the following energy regulation subjects:
1. Establishment of criteria for assessing the need for price regulation in certain electricity market segments
Following the enactment of the new Energy Law at the end of 2014, only households and small-medium size enterprises (SMEs) are entitled to receive guaranteed electricity supply at prices regulated by the Energy Agency of the Republic of Serbia. In addition, the provision of secondary and tertiary reserves, that are required for electricity system balancing, is also a system service subject to price regulation. The project team analyzed in detail all the aspects of the market liberalization process in Serbia, including issues such as the development of national and regional competition and the protection of vulnerable customers, and proposed to the Energy Agency internal procedures and criteria for assessing the need for further price regulation for households, SMEs and secondary and tertiary reserves.
2. Establishment of criteria for abolishing the Supplier of Last Resort in the electricity sector.
The role of the Supplier of Last Resort in Serbia, as defined in the 2014 Energy Law, is to ensure uninterrupted electricity supply for consumers not being eligible for the guaranteed supply regime. In this context, the Energy Agency of the Republic of Serbia is empowered to assess the necessity of the operation of the Supplier of Last Resort and its impact on competition. The project team provided detailed case studies from the operation of the Supplier of Last Resort in EU Member States, assessed the necessity of the operation of the Supplier of Last Resort in the electricity sector under the current market framework, and provided recommendations to the Energy Agency of the Republic of Serbia for the role and the functions of the Supplier of Last Resort in the future, including assessment criteria on the possible time of its abolishment.
3. Compliance programmes for Electricity and Natural Gas Distribution System Operators
One of the key requirements of the 3rd Energy Package is the separation of vertically integrated energy companies (“unbundling”), which eliminates the risk of discrimination in the operation of the networks and on the way access to the networks is given. To this end, Distribution System Operators are obliged to develop compliance programmes and annual reports in order to ensure that there is no discriminatory conduct and that the unbundling process is properly monitored. The project team developed regulatory instructions to the Compliance Officers of the Distribution System Operators on the way that those programmes should be developed and implemented, giving practical recommendations regarding the type of measures that may be included in the programme and the way these measures should be implemented and monitored through the annual reports. In addition, practical guidance was given to the Energy Agency of the Republic of Serbia on how to assess the content of the compliance programmes and the respective annual reports.
4. Recommendations for regulatory investment incentives for electricity and natural gas network infrastructure projects
The EU Directive 347/2013, which has been transposed in the legal framework of the Energy Community, has provided guidelines on the way to manage the risks of large-scale electricity and natural gas network infrastructure projects, as well as the type of regulatory incentives to be given so as to promote the development of those projects and mitigate incurred risks. In this context, the project team thoroughly reviewed and assessed the relevant regulatory framework set by the Energy Agency of the Republic of Serbia to identify if it creates additional risks or barriers for network infrastructure investments. In addition, risk-related regulatory incentives were proposed to the Energy Agency of the Republic of Serbia for the whole portfolio of electricity and natural gas network infrastructure projects to applied in case that a certain project promoter experiences higher risks compared to the risks normally incurred by a comparable infrastructure project.
5. Assessment and upgrading regulatory framework for quality of service
The general goal of the quality of service regulation at electricity and natural gas level is to guarantee a good level of continuity of supply, voltage quality, gas quality and efficient services for electricity and natural gas consumers. The project team initially performed a gap assessment of the Serbian legislation against the requirements of the 3rd Energy Package, while analyzed best practice solutions followed at EU level. The next step was the development of suitable indicators and standards for electricity and natural gas service providers, while support was provided on the Energy Agency of the Republic of Serbia on developing regulatory instructions for submission of quality of service data. The last part of the work focused on making recommendations for further development of regulatory mechanisms in relation to price regulation and network planning, while methodologies were proposed for the calculation of compensation to customers due to quality of service deviations.