Serbia: Is former monopoly power utility ready for competition in supply, EPS and market liberalization

8. July 2013. / News Serbia Energy

All electricity buyers connected to transmission system lost their right for automatic public supply according to the rules of Energy Law from August 2011 since 1st January 2013 (electricity supply at privileged regulated prices). In other words, we came up to electricity market opening on high voltage in Serbia. Power state utility company EPS has patiently waiting on this moment and prepared for it.

EPS was selling market product- electricity to its buyers at regulated prices determined by Serbian Government in the whole former period since 2004 (Energy Law). The prices were far from any market levels so no buyer wanted to go out to the market by its own will. In other words, EPS subsidized its production because it was selling them electricity at the lowest price in Europe while those from the other side was selling their products at prices determined by market (domestic and foreign) and achieved big profits this way. This kind of business had to leave consequences. The difference in price needs to be paid by someone. Consequence for EPS is big accumulated loss and ruining production capacities because of inabilities (assets’ lacking), their appropriate maintenance despite all efforts that employees did and they have done a lot. EPS is the only company in the country that has always been working on maximum of their production capacities. Electricity was produced and delivered to the system without any problems and stoppages.

When EPS got out at the market, it got a chance to show its motion readiness, knowledge and professionalism of its employees and sell its product at the best price in an open competition with other participants. And it did it. 26 companies of 27 have chosen EPS as electricity supplier in 2013. Electricity is sold at market prices and maximal profit is achieved. There were some problems. The most problems were in the form of pressures to postpone laws’ enforcements and to gradually transfer them. Market is opened or closed and there are no price increases or decreases. The price is being formed on the base of the offer and purchase, there is no involvement of regulators or policy and there is no sentimentality.

Situation in the industry is not easy and everyone fights for surviving the best they know. Poverty is huge and industrial products are being sold very hard. But everyone forgets that EPS is the biggest industrial producer. If other have difficult times, EPS ha the most difficult times so it fights the best it knows to sell its product.

The times of arranged economy and regulated prices has passed since 1st January 2014. All consumers lost their right on public supply except for households and small buyers (companies with less than 50 employees and transfer smaller than 10 million EUR). 40% of the electricity market is opened with losses in transmission or distribution level that will be covered at market prices also. Electricity buyers will have to get used to the fact that there is no guaranteed delivery and not paying electricity anymore and that they will have to put all their effort in market conditions to find the best offer for their company.

EPS will act at market criterions. It won’t subsidize anybody and it will use every chance to sell its goods at best prices in the country or abroad.

Source; Serbia Energy

 

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