Montenegro: The new Energy Law stipulates independence of the market operator

23. September 2014. / SEE Energy News

The new draft bill on Energy will define the manner to effectuate independence of electric transmission and distribution system operator, and stronger role and independence of the regulator, it was announced at a public discussion on this legal document.

General Manager of The Directorate for Energy within Ministry of Finance, Miodrag Čanović, stated at the central round table at public discussion which is going to last until Monday, that passing of the new law will contribute to further harmonization of Montenegrin legislation with EU’s.

The new draft bill, as was explained, defines energy activities and settles conditions and modes for their performing, with the purpose of safe and high-quality provision of customers with electricity. The law defines other public services and activities in the energy sector, of interest for Montenegro, modes of organizing, managing and functioning of electricity and gas markets, as well as energy efficiency in generation, transmission and distribution sector.

Čanović explained that draft bill introduces new energy activities, like production, transport and storage of biofuel and bioliquids, and their trading.

“The chapter on energy policy and planning of energy development is complemented with the content of local energy plan”, that should be made by local government for a period of 10 years, Čanović specified.

The chapter on renewable energy sources, cogeneration and incentives defines the obligation of the government to adopt a national action plan for usage of renewable energy sources, for a period of up to 10 years.

Chapter Regulatory Agency for Energy (RAE) contains, as he stated, provisions that strengthen the role and independence of regulatory authority.

The chapter on prices, tariffs and fees defines the method for determining regulated prices for using transmission and distribution systems for electricity or gas, which applies supplier that performs public supply, as well as tariffs for gas storage, said Čanović.

When it comes to unauthorized use of energy, defined are measures for detection, proving and preventing of unauthorized energy use.

Consultant on drafting of the new law on energy, Marko Sencar, said that during draft bill’s preparation the balance between interests of different parties was taken into account, and that all models are adjusted to the situation in Montenegro.

‘A significant part of the law refers to RAE, because regulators are institutions of expertise, for which they are given independence in all countries. This law respected that, because experiences of EU countries, even in the period prior to the stage we’re in right now, showed that the most difficult situations were in those states where regulators weren’t sufficiently strong and independent, explained Sencar.

Answering the question who will protect the consumer, meaning why final users pay for network loss, Senicar answered that technical losses are normal part in sections of any system.

Canovic explained that regulator determines the prices, based on the costs.

’All costs are included. Technical losses depend on the network. Our losses amount to 9% because we didn’t invest in the network in previous 30 years, not just us but the region as well. We were dealing with other problems, like unresolved political situation’, Canovic reminded.

Representative of the Network for Affirmation of NGO Sector (MANS), Ines Mrdovic, asked why should final buyers be interested in huge losses of EPCG, which doesn’t invest in distribution network, and which held 130 million EUR in banks at the end of 2013.

She asked for explanation about deleting the article which enabled dismissing members of RAE board, in case the parliament doesn’t adopt the report on the conditions in energy sector.

President of the Energy community, Milka Mumovic, considers that the essence is for regulator to be the top expert authority in any country.

‘We demanded deleting of the article which stipulates dismissal of the Board, in case regulator’s report fails the adoption. There are millions of reasons for report not to be adopted, and then it should have been précised what the regulator should have done, but didn’t do so,’ stated Mumovic.

She stated that new law introduces market principles in formerly public (state) area, with the aim to protect better interests of all parties – producers, operator of transmission systems and final consumers.

Public discussion on that draft bill is open until Monday, and it is the final day for submitting comments and suggestions in written form to Ministry of Economy.

Current Law on Energy was passed in 2010. when there was no obligation of total compliance of Montenegrin principles with relevant EU directives.

In preparing draft bill on energy participated Marko Senicar, the consultant and representatives of Ministry of Economy, RAE, Electric power industry, Electric Transmission System of Montenegro (CGES), Montenegrin electricity market operator.

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