Big electricity consumers in Serbia to start purchasing electricity from the market

19. December 2012. / News Serbia Energy

Consumers of high voltage electricity will purchase electricity directly in the market from January 1, 2013, and some of them fear that the price will be 60% larger than the current price. Successful companies are among the major consumers like “Lafarge”, “Sirmium Steel”, NIS, “Messer Tehnogas”, “Kronospan” FAS, “Holcim”, “Titan”, “Copper Mill Sevojno”, which employ thousands of workers and are the biggest exporters, while new, high costs, will contribute to a loss of competitiveness, reducing exports, and in some cases, termination of production and bankruptcy.

As some of the consumers say, even though the Energy Law allows free choice of electricity suppliers, the fact remains that nothing has changed in terms of electricity price formation, due to the fact that there is no realistic possibility of rejecting the price that was already defined and offered, as in the case of tariff or regulated price approved by the Government of Serbia.

– With all due understanding for “Electric Power Industry of Serbia”, that its aim is to increase prices of electricity, without dealing with the reasons, the method of forming and the actual price level, we believe that such a drastic and instant increase in prices could cause immeasurable economic harm to individual companies and the economy in general of the Republic of Serbia – consumers we spoke with, appeal.

As one of the solutions they see an electricity price increase in a responsible manner that will not lead to price-shock in the market, and other dramatic consequences, but will leave time to the affected industries to adapt to gradual price increase for at least three years, with a clear and defined way of forming and adjusting prices.

This practice was seen in some EU countries, where the transition period was from 5 to 10 years.
From Energy Agency they told us that the market is potentially open in Serbia since 2008, to all customers except households with 47% of electricity market and 90% of the natural gas market.

– We believe it is since then that buyers are preparing to independently procure energy in the market. In the field of natural gas, about 40% of total annual consumption was purchased at free, unregulated prices since 2010. However, there was no interest to buy electricity in the market, because the market price was higher than the regulated – they stated in the Agency.

When asked whether the electricity would actually be 60% more expensive, the agencies say they are not responsible for the market price.

– In Serbia, there are 59 licensed electricity suppliers in the free market. Electricity prices will be the result of competition between the suppliers. One can not expect that it will be smaller or equal to the current regulated price, which does not reflect the actual costs of operation and development of energy companies, because of the efforts of the authorities to restrict the growth of regulated prices.

Private companies are further discriminated because the state companies which are big consumers are also in big debts. Among the biggest debtors are the companies in the process of restructuring, which have been protected by this status for years. Restructuring is coming to an end, and the state will reduce their subsidies the following year. On the other hand, the company expects higher costs. The question is whether anyone can compete for those customers of electricity and whether those without state subsidies would remain in the dark.

New tariffs will affect existing producers, but it will certainly affect the interest of the new, because the conditions for industrial production less attractive.

There are some good examples

In spite the fact that with the Energy Law, EU directives on development of the internal market in electricity and natural gas have been adopted, some members of the community still take steps to help industrial producers.

One of them is Germany, which has decided to initiate a compensatory mechanism for the industry due to the increase in electricity prices since 2014. The increase is expected in the coming years due to higher production from renewable energy sources purchase of obligatory  quotas for carbon dioxide emissions in the EU. The measure was taken in order to preserve the competitiveness of German industry in the international market and to prevent the relocation of production, and Berlin will partially offset the costs of the electricity to companies in the sectors that are the biggest consumers.

Reimbursement of the first compensation in the amount of 350 million Euros is planned for the beginning of the 2014. Compensation will be paid to companies in sectors such as the chemical industry and steel and paper industry, employing 830,000 people, according to a statement from the German ministry.

How will our country react it remains to be seen, since the Ministry of Energy did not have time to answer any questions.

Source Serbia Energy Magazine

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