Serbia exclusive: New energy law, another alignment with EU directives

15. December 2014. / News Serbia Energy

According to all announcements, but also to the obligations of Serbia on the path towards the EU, the new Energy Law should be adopted within the following month.

One of the most important objectives of the new Energy Law is the implementation of the Third Energy Package, the directives of the European Parliament and Council on the common rules for the internal market in electricity. The Third Energy Package of the European Union on the liberalization of electricity and natural gas markets prescribes the separation of the network activities from the generation and supply. The aim is to create a uniform European market on which the networks will be available to all under equal conditions. This should enable a greater development of the transmission network, market strengthening and higher investments in the energy sector.

The third package does not require the privatization of any segment of the energy sector. It requires the strengthening of the role and independence of the national regulatory bodies, but also their cooperation on the EU level. In addition, the cooperation between the national transmission and distribution system operators is envisaged.

Moreover, the intention is to create the foundation for implementing the regulations on the conditions for accessing networks for the purpose of cross-border exchange of electricity, to implement the Directive on promoting the use of energy from renewable resources, to improve the energy market development, i.e. to make the electricity and natural gas market function more efficiently.

The Law should also create a more favourable climate and simpler procedures for investing in energy and it should eliminate the detected deficiencies in the generation, distribution and supply of heat energy, as well as in the manner of pricing.

As it is written in the Draft, by this law, the objectives of energy policy and the manner of its achievement are regulated, as well as the conditions for a reliable, secure and quality delivery of energy and energy-generating products and the conditions for secure consumer supply, the protection of the consumers of electricity and energy-generating products, the conditions for and the manner of carrying out energy activities, the conditions for constructing new energy facilities, the status and scope of operation of the Energy Agency of the Republic of Serbia, the use of renewable energy resources, the incentive measures and the guarantee of origin, the manner of organisation and functioning of the markets for electricity, natural gas and oil and oil derivatives, the rights and obligations of market participants, the establishment of ownership over the system operator networks, as well as the supervision over the implementation of this law. By this law, the generation, distribution and supply of heat energy are regulated as energy activities.

The fundamental objectives of the EU within the sphere of energy are: energy supply security, competitiveness and climate change mitigation. Special attention is paid to energy-protected customers, i.e. the poorest citizens. Serbia has fulfilled its obligations within this sphere by adopting the Regulation on Energy-Protected Customers, on the basis of which the gas, electricity and heating bills of the poorest customers are reduced.

In the report issued by the Energy Community in September, the progress of Serbia in the implementation of the Third Energy package was praised. The positive progress in the electricity market opening was particularly emphasized, its last step being expected on 1st January 2015 when households and small consumers will appear on the liberalized market. It was recommended that Serbia should take steps towards electricity price deregulation and the establishment of an electricity stock exchange.

However, Serbia was criticized for not fulfilling the obligations on the natural gas market, i.e. for the delay in separating the production and transport activities within the companies Serbiagas and Yugorosgaz. On the market, the domination of one company, which [was] state-owned, and which [was] supplied by only one supplier on the basis of a long-term contract, probably [meant] a violation of the European regulations within the field of energy and [called] into question the overall good progress of Serbia within the energy sector, it was emphasized in the Energy Community report.

According to the Energy Community Secretariat, the Draft Law has progressed after each round of talks and discussions with the experts from this field. At the latest meeting with the EC representatives, held at the beginning of November in Belgrade, the emphasis was placed on the fact that, once the rules were adopted, the focus of the Government must be on their implementation.

The elements of the Third Package related to the separation must be implemented in complete accordance with the provisions of the Ministerial Council. There must not be any delay in the certification process for the transmission system operator. This process may also require legislative changes of the Energy Law (such as the Government procedures) which must be adopted timely, by 1st June 2016 at the latest.

Domestic institutions must take a more active role in the processes of separation and market opening. This refers to the energy regulator, which will be strengthened according to the new Law and which must use its powers proactively. It is necessary that transparency be as high as possible and that discrimination be avoided. There should not be any abuse of the dominant position of national operators.

Renewable energy resources and the Directive 2O09/28/EC, which depends on the further adoption of by-laws, were also discussed at the meeting.

New Draft Energy Law is pending in the Government, and its adoption is expected after obtaining the positive opinion of other ministries. The Minister of Energy Aleksandar Antić has recently said that the approval of the European Commission, as well as the positive opinion of the Energy Community, was obtained for the Draft Law. The law accepts the Directives of the European Union and develops market elements within the sphere of electricity and gas.

Antić has reminded that the Ministry prepared reorganization plans for the EPS and Serbiagas, that will define them as the companies with modern organization which should provide energy stability. The EPS has to achieve profit, one portion of which will be invested, whereas the other portion will flow into the budget. Talking about the price of electricity, Antić has said that it has to reach the economic level gradually, over a number of years, with taking into account the social and economic situation in the state.

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