Serbia: Electricity retail market, market segmentation

30. June 2015. / News Serbia Energy

Since 1st January 2013, the free market has had 23 customers who took the energy on the 110 kV level and whose annual consumption was at the level of 1,870 GWh.

Since 1st January 2014, the obligation of electricity supplier choice, without the right to public supply, have hadall the legal entities and entrepreneurs who had more than 50 employee, revenue higher than EUR 10 million annually and whose facilities were connected to the voltage level higher than 1kV. In accordance with the foregoing conditions, on the other segment of the free market, with annual consumption of 6,429 GWh, on the medium voltage (voltage levels 35 kV, 10 (20) kV) and low voltage 3.278 customers were identified with a total of 35,891 measuring points at all voltage levels.

The law also envisages the third phase of market liberalization, which started from 1st January 2015, since when the households also had a right to choose a supplier. Also, the current Energy Law provides that from 1st July 2015, all the customers will have a choice of suppliers and the right to a guaranteed supply will be able to achieve only the households and small customers (legal entities and entrepreneurs who have less than 50 employees, total annual income of up to 10 million euros which all objects are connected to the distributive system of electricity voltage below 1 kV and with a consumption of 30,000 kWh per year). What is important to note is that the households and small customers (whose consumption is less than 30 MWh per year) remain entitled to guaranteed supply and with that right they acquire the right to choose their supplier as well, while all the other customers are no longer entitled to guarantee supply and must choose the supplier.

During 2015, at the free electricity market in Serbia, it is planned to supply around 15.2 TWh of electricity, which accounts for about 43% of total electricity in Serbia, of which:

5.57 TWh from the transmission and distribution system for the coverage of losses;

8.3 TWh from the customers who have lost their right to have a guaranteed supply in previous years, and

1.32 TWh (which represents a half of the annual consumption) by the customers who will lose their right to a guaranteed supply during 2015, i.e. from 1st July 2015.

The third information is estimated based on the data collected from the distribution system operators for the year 2013, where the 29,297 customers were identified whose consumption was greater than 30 MWh per year, and their total consumption in 2013 was 2,639 GWh.

Based on the data presented, the OPS (PE “Elektromreže Serbia”) has obtained the energy to cover loses in the amount of 1.1 TWh in the public procurement procedure, at the tender, while the remaining 4.47 TWh of energy for covering the loses of 5 distribution system operators has been obtained without a public procurement procedure, directly from the PE “Electric Power Industry of Serbia”), but at the market price. Since it is realistic to expect that the OPS and ODS will deliver the electricity needed to cover the losses to the EPS, the amount of energy other suppliers can certainly count on is about 9.6 TWh in 2015, or about 11 TWh in 2016. In addition to the amount that customers must purchase on the market, in the following years a certain amount will appear which the customers, who have the right to guaranteed supply, will purchase from the other supplier, not for the guaranteed supplied. Although it is ungrateful to give more specific prognosis of these quantities, since it depends on several factors, the authors will hereinafter try to give an assessment.

During 2015, at the segment of the guaranteed, the planned consumption is around 18.4 TWh, while, in 2016, the planned consumption would be around 17 TWh. The author’s conducted analysis, at the end of 2014, indicate that negligible segment of customers on a guaranteed supply has an interest that within the current tariff system go on the market and change the type of the supply, as it is illustrated by the two graphs below, for the one-tariff and two-tariff customers. Based on the above analysis, taking into account the data of the distribution system operator for 2013 and for “misaligned” 2014 (the period from September 2013-September 2014), it was concluded that the number of potential customers goes on the level below 5,000 customers, which makes 1 to 2% of all the customers on a guaranteed supply.

As far as for the electricity prices in the domestic retail market, the dominant supplier is “EPS Supply” with a share of more than 96%. In the business policies of electricity prices, the “EPS Supply” was led by the current prices on the neighboring markets, accustomed for the time period of contract of one year, the amount of the electricity which was agreed and the current offer on the domestic market. Primarily, the “EPS Supply”, with a lower price of electricity and lower balancing costs in relation to the competition, which consists of over fifty registered electricity suppliers in Serbia, managed to achieve a dominant position in the market. The mean value of a unique electricity price, achieved in the segment of commercial supply for 2014, was above 44€/MWh, which was in accordance with the achieved prices in the European markets, bearing in mind that it was a retail price. One example of this is the Hungarian Stock Exchange (“HUPX”), where the price of electricity for annual delivery in 2014, at the time of contracting (December 2013), was at the level of about 44 €/MWh.

By identifying and defining the policy regarding the prices in 2014, as well as with implementation in the process of negotiating the electricity sale, the higher average contracted unique price was achieved for 2015, which, at the time when the intersection was made (in late January) was by 0.65 €/MWh higher than the previous, with the projection of further growth, since, in the first quarter of 2015, a significant number of public procurements will be realized, so it is expected for the increase to be up to nearly 0,9 €/MWh, compared to the average contractual unique price for 2014. In this way, the increase of the planned income of EPS Supply, amounting about 6 million euros annually, is expected in the commercial segment, while almost all existing customers are retained and some taken form the other suppliers.

In general, the prevailing retail price of electricity in Serbia mainly reflects the price of “futures” on the Hungarian Stock Exchange increased by an amount of 0.5 to 1 €/MWh and increased for the trading margin to 2% for the other segments of customers, depending on their consumption. , transmits

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