“How to reach the integrated market of electricity in South Eastern Europe?”, Road to the market leads through reforms-

18. May 2013. / News Serbia Energy

Serbia has already adopted many of the documents and passed laws in the course of opening electricity market, but we are still inefficient in their application. – For the first time ever and not before the law that imposes the obligation of entering the market was applied, did it happen that a high-voltage buyer opted for a supplier other than EPS. – There is no market out of the rule of law, respect of contracts and fulfillment of obligations.

Serbia does not exploit full advantage of its central position in the region, but to take the advantage of the South East Europe energy market it has to restructure large state systems, such as the “Electric Power Industry of Serbia” and “Srbijagas” – said Ms. Zorana Mihajlović, Minister of Energy, Development and the Environment , on 25 April at the Conference “How to reach the integrated electricity market in South East Europe”.

Ms. Mihajlović explained that it was necessary to restructure these two state-owned companies to be able to compete with the European companies. – Serbia has already begun the process of opening the electricity market and the government will do anything to keep the job going – stressed the Minister of Energy. – There is a legal framework for the liberalization of the market, but the state has in some ways been unprepared.

According to Ms. Mihajlović, the Serbian government, in consultation with the Energy Community of South East Europe, shall adopt appropriate decisions to create a regional stock market for electricity. She said that there are 29 registered suppliers in the electricity market in Serbia this year. – Serbia has already adopted many of the documents and passed laws to open electricity market, but we are still inefficient in practice – said Ms. Mihajlović. – It’s not because someone is incapacitated or underperforming, but there is a big resistance in all large systems when it is necessary to make some changes. The state is ready to enable EPS to become a competitive enterprise.

The Director of the Energy Community of South East Europe, Mr. Janez Kopač, praised the legislation in Serbia and commitment to reform the energy sector. He pointed out that until 2014 European Union is aiming to become an integral electricity market, instead of the current eight, which are divided by trade regions.

Regarding the regulated prices of electricity, they are still valid in the countries of European Union, but the liberalisation process should also go that way- said Mr. Kopač.

He pointed out that the region of South Eastern Europe is mostly synchronized with power systems of Europe except of Moldavia and Ukraine, but the implementation of European directives, which refers to the second and third energy package, is still in delay. He pointed out that it is necessary for prices, i.e. regulated tariffs to express also production costs that also have to be clearly defined. Mr. Kopač pointed out that it is necessary to remove barriers for market opening and the Secretariat of the EU made Action Plan for correction of the previous steps.

Ms. Ljiljana Hadžibabić, a Council member of the Energy Agency of Serbia, reminded that all laws for the development of the electricity market were adopted, except for rules on the regulated market pending the Serbian government decision on how the market shall look like.

– Since 2008, all customers except for the households have been able to purchase electricity outside of EPS, but because of the low prices in Serbia, nobody changed the supplier. Only after the new law was introduced that imposes the obligation of entering the market, it happened that a buyer of high-voltage electricity found a supplier other than EPS – said Ms. Hadžibabić.

She pointed out that Serbia had already prepared documents for establishing a regional market exchange of Serbia, and it is now up to the Serbian government to adopt decision in that regard.  Mr Dragan Vlaisavljević, Director of EPS Department for energy trading, presented the ongoing process within EPS of separating the supply from the distribution to participants of the meeting. He pointed out that in the first phase of this process, the public supplier, who is in charge of supplying tariff customers, purchase electricity under a contract of full supply, and that is no good for the market liquidity. The establishment of competition in the regional market shall result in more competitive production, while at the same time inefficient and costly production shall come to a closure and building of new replacement capacity becomes necessary. Mr. Vlaisavljević reminded that renewable energy sources also affect the market.

– Together with the increased involvement of and subsidies for renewable energy, particularly in Germany, disruptions in the electricity markets become greater – said Vlaisavljević. Director of the EPS Department for energy trading pointed to the necessity of using the third package in practice.

– There is no market without the rule of law, and respect for contracts and payment obligations. This is the key to integration and market. The enhancement of market liquidity shall reduce the difference between prices and the market price will prompt households to enter the market – said Mr. Vlaisavljević. – The market liquidity may be raised only through observing the contracts and regular payment scheme; this is also the way to reduce the difference between the public supply prices and market prices.

SEEPEX at the door

Mr Vladimir Janković, Director in charge of the electricity market in the “Electrical networks of  Serbia” presented the market functions of the company, as well as plans for the establishment of stock exchanges SEEPEX.

– The idea is to exchange SEEPEX ties with other countries. It should be also made available to those countries that do not have a stock exchange, such as Montenegro and Bosnia and Herzegovina. The platform and procedures should be borrowed from an existing large stock exchange, and the goal is to attract large retailers, market makers, which would have been given the ownership in the stock – Mr Janković said. – The idea is to improve the market and to get a good reference price, as well as to offer a range of products to the retailers. In the first phase, the Serbian stock market would facilitate access for Bosnia, Macedonia and Montenegro, and in the second phase it would be connected with Hungary and Romania, and through them, with the Czech Republic and Slovakia. Energy prices in the market would probably be calculated in euros, and the clearing house would be some of the banks in Serbia.

Serbia with the lowest price

In the year 2012, over 40 terawatt-hours of electricity were transferred through Serbia, while our final consumption is 28 terawatt-hours, and all the difference is the trade. According to the Energy Agency, over 8,000 terawatt-hours went through just in transit. Also, regarding the comparative prices of industrial power in Europe, Serbia has had so far the lowest price, which created a lack of funds for investments.

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