Serbia: 2015 full opening of electricity market, EPS power utility vs GEN-I most active power trader in region

19. November 2014. / News Serbia Energy

On the Serbian electricity market, which will become fully opened as from the New Year, which means for households too, there will not be any big changes, because the customers from this category will still remain on the public supply. In Serbia, the opening of electricity market began less than two years ago. More precisely, the largest consumers, those on the high voltage, entered the market in 2013, and in early 2014, the same happened with all the customers on the medium voltage – the industry and major institutions. The Messer was the first customer who chose a new suppler and they went over to the company GEN-I for electricity supply.

The innovation is that, from the 1st January, the households will also be able to choose a supplier. However, having in mind the fact that, in our country, the price of a kilowatt-hour for households, even considering the green, blue and red consumption zone, is significantly below the economic price, it is hard to expect that any supplier will be ready to offer a price that is lower than the one charged by the “Electric Power Industry of Serbia”. However, it is important that the households also start getting familiar with the new market rules on time – says Mr. Željko Marković, director of EPS Supply.

Everyone agrees that this price situation cannot last for too long. It is almost certain that, in no more than two or three years, the rules already applied on the European market will also have to be applied on ours. The precondition for this is the preparation of a social map and determination of household categories for which the price must remain regulated, whereas the price for all other customers will be the market one. Only then is the space for real competition created. Such competition which has already started functioning in our country, too, in the case of the customers on the high and medium voltage, i.e. the economy. At this moment, not more than two to three percent of households could embark on the quest for a better offer, those that have electric central heating boilers in their houses and spend more than 2.000 kilowatt-hours of electricity per month during the winter period.

– In the price package that the “EPS Supply“ will offer to the households with high electricity consumption, there will no longer be a green, blue and red zone, but only a higher and a lower daily tariff. The households that have chosen this package will pay 4.60 RSD for the cheaper kilowatt-hour and 9.25 RSD for the more expensive one, VAT excluded. With this package, those who, for example, spend 2.500 kilowatt-hours, of which 1.750 kWh within the higher and 750 kWh within the lower tariff, will be able to save about 1.300 RSD per month. According to the new calculation system, they will pay 24.700 RSD, instead of 26.000 RSD which is the cost of such consumption according to the current tariff package. The package without consumption zones will also be offered to the households that possess single-tariff electricity meters. For them, the price of a kilowatt-hour will be 8.20 RSD, VAT excluded.

Encountering the full opening of electricity market, in addition to the households, the “EPS Supply” has also prepared a package for the customers from the small business category which can be interesting for those with the high rate of power input and small electricity consumption. In this package, a kilowatt-hour costs 4.64 RSD in the lower tariff, and 8.63 RSD in the higher, VAT excluded. It is interesting that no supplier, so far at least, has come forth with the conditions that are more favourable than the existing ones offered by the “EPS Supply”. In the opinion of Mr. Robert Golob, Chairman of the Managing Board of GEN-I, which has been present on our electricity market since the beginning of its opening, the most important condition which should be fulfilled so that the competition could flourish are the effective rules of market functioning, that have been tested in practice, too. Primarily those that refer to the replacement of the supplier, the exchange of the customer measuring data, as well as the system for calculating the consumption and the grid tariff.

In Serbia, the opening of electricity market began less than two years ago. More precisely, the largest consumers, those on the high voltage, entered the market in 2013, and in early 2014, the same happened with all the customers on the medium voltage – the industry and major institutions. The Messer was the first customer who chose a new suppler and they went over to the company GEN-I for electricity supply. According to Mr. Marković, the Messer is going back to the EPS Supply the following year. GEN-I will supply some other customers, for example, the Belgrade water factories “Makiš“. The rules of market competition imply that contracts are signed for the period of one year and that the suppliers fight for each customer. The companies Rudnap, Vuković 1967 and Nova Commodities are also active among the suppliers on our market. So far, about 140 companies have chosen a new suppler and about thirty companies are in the contract signing phase.

Slovenia was the first among the ex-Yugoslav countries to open the market and the households in Slovenia have been able to choose among the offers of suppliers for five years already. In addition to the price, their decision is also affected, for example, by the guarantee that the price lists will not be changed for a year or by the first bill being free of charge. Today, the customers in Slovenia are supplied by several suppliers. There are five companies included into electricity distribution companies – the Electric Power, the Power Plus, the Electric Power Celje, the Electricity Sale Gorenjska, the E3, and the Petrol, GEN-I and several more small suppliers oriented only towards certain segments of customers.

In Croatia, the competition over households and small consumers began among the suppliers mid last year when GEN-I and RWE offered a price that was lower than the one charged by the Croatian Electric Power Industry. As HEP then also reacted to the offer of the competition, the supplier price lists have been adjusted several times in Croatia within a short period of time. The fact that 35 ministries and state offices went over to HEP’s competition for electricity supply attracted the public attention in this country. Together with the Electric Power Industry of Croatia, the companies GEN-I, RWE Energy, ProEnergy, the NOX Group, Rudnap, the Croatian Telecom, Korlea and Petrol also operate on the Croatian market today.

In Montenegro, Macedonia and Bosnia and Herzegovina, the full market opening is “scheduled” for the first day of the following year, the same as in Serbia. According to expectations, Serbia should enter 2015 with a new Energy Law. According to the Draft Law, when it comes to the small economy, in addition to the companies the annual income of which amounts to less than 10 million euros and which employ less than 50 people, the companies which, in addition to this, spend less than 30,000 kWh of electricity annually will not have to look for a supplier on the market either. Everyone else will have to cope with the market rules.

Marković: We Enjoy the Confidence of Large Customers

After the second phase of liberalization, the ”EPS Supply” has preserved 97 percent of the electricity market and we are planning to keep this percentage in the next year, too. For the year 2015, we have already concluded contracts for 15.54 percent of the energy purchased on the free market, and the large customers such as the Post of Serbia, Lafarge and NIS have bestowed their trust to our company. At this moment, the “EPS Supply” has 3.6 million customers on the public, 3.800 customers on the commercial and 1.300 customers on the reserve supply. The customers who had to enter the market on 1st January, but who have not finished the restructuring process yet or who are in bankruptcy, are on the reserve supply until the end of year. The possibility of reserve supply has been extended several times for them and, for now, it is uncertain what will happen to them in the following year – Mr. Željko Marković, Director of the “EPS Supply”, explains.

Golob: Everything is in the Hands of the EPS

– Our experience shows that customers expect to continue receiving an integral bill, and not two, for the grid tariff and the electricity. Even today, a year and a half after the competition on the market also lowered the prices for households, this issue is not regulated in Croatia. It is also important to see what prices are charged by the company that now has a dominant impact on the market. Because, it is a fact that customers will not choose alternative suppliers if the price differences are not bigger than ten percent. When it comes to the pricing policy, everything is in the hands of the EPS, which, for now, is not following the market trends. However, it is a matter of time when, for certain customer categories, the EPS will also start charging the prices that will make a positive margin possible for alternative suppliers – says Robert Golob, Chairman of the Managing Board of GEN-I.

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