Serbia: New Energy law, unbundling and competition framework

, News Serbia Energy

The new Energy Law has been enacted in December 2014. The principle aim of the new legislation has been harmonization with the aquis communautaire and liberalization of the market, ensuring freedom of conducting business activities and free access to the system for all third parties. The law has imposed an unbundling obligation and prescribed deadlines for harmonization of the operations of the companies active in energy sector with the new law.

Regarding the obligation of unbundling energy-related activities, the new Energy Law sets the deadline for unbundling, certification of new operators and obtaining the necessary licenses to two years from the date of its entry into force. Unbundling means separating the activities of production, public supply, transmission and distribution.

Unbundling of activities has already taken place in the field of electric power, by merger of 14 existing companies in the system of Public Company JP Elektroprivreda Srbije. After the merger only three companies remained: (i) JP Elektroprivreda Srbije, in the business of production and supply, (ii) EPS Snabdevanje, as public electricity supplier, and (iii) EPS Distribucija, as operator of the electric power distribution system. The merger took place on July 1, 2015. Transmission of electric power is conducted by Public Company JP Elektromreža Srbije, which had already been a separate company.

In the field of natural gas the unbundling is in its beginning stages – on July 1, 2015, the Serbian Government approved the establishing of subsidiaries of Public Company JP Srbijagas, which had previously conducted the activities of transportation, distribution and supply of natural gas; these subsidiaries are a company that will perform the activity of transportation of natural gas and a company that will perform the activity of distribution of natural gas, so it is expected that these activities will continue until these subsidiaries receive licenses for their respective energy-related activities. JP Srbijagas will remain to perform the activity of supply of natural gas.

Electric power transmission system operators and natural gas transportation system operators will have to undergo a certification procedure, within which they must demonstrate to the Energy Agency that they are independent from other activities with regard to legal form, organization and decision-making. The new Energy Law provides more detailed rules regarding the conditions that a natural gas transporter has to fulfil than the rules governing the conditions an electric power transmission system operator has to fulfil. Certification is the previous step preceding the obtaining of a licence for conducting the respective energy-related activity.

The companies that will be in the business of distribution of electric power or natural gas also have to be independent from other activities with regard to legal form, organization and decision-making, but these companies do not have to undergo a certification procedure; instead their independence will be assessed within the licensing procedure.

The prerequisite for commencement of the certification procedure is the enactment of the appropriate bylaw which will regulate this issue in detail. The Energy Agency is obligated to enact this bylaw by the end of 2015.

Apart from certification and licensing for the relevant energy-related activity, these companies will also have to adopt a program for ensuring non-discrimination which contains measures for preventing discrimination, obligations of employees and rules of conduct in ensuring non-discrimination, efficient supervision and regular reporting, and specifies the person in charge of supervising the implementation of this program. The appointing of this person is subject to the prior consent of the Energy Agency. The responsible person will be obligated to prepare annual reports on undertaken measures for implementation of the program, submit the reports to the Energy Agency and publish them on the website of the system operator, or vertically integrated company. , transmits

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