Serbia: Power market 2014 Market deregulation and energy trade in EPS, 13 terawatt hours of total 34 of annual consumption of electricity will be placed on the market

27. August 2013. / News Serbia Energy

The supply of end customers is included in the company “EPS Supply”, which is both public supplier and supplier. The Department of Electricity Trade of EPS remains the trader of the producers, thermal power plants and hydro power plants.

The internal market of electricity in the Republic of Serbia is both free and regulated. It is more accurate to say that its minor part is free and the major part is regulated, i.e., since 1st January this year, when the users of the high voltage lost their right for public supply, the deregulation process has just started. All the potential participants on the free market have been preparing for this moment for a few years, and yet essential solutions have been determined “minute after midnight” (contracts of final customers and suppliers, adopting the Rules on market operations of the high level voltage, with the introduction of trade balance responsibility, called the Market code by the experts).

However, there wasn’t a disorder in supply of big end customers, in spite of such a delay. Out of twenty seven companies, the largest users of electricity in Serbia, twenty six companies chose “Electric Power Industry of Serbia” for their supplier even under the new market conditions. In this way the deregulation has started according to the previously accepted obligations from the contract on Treaty on Establishing Energy Community of South East Europe and amended Energy Law of Republic of Serbia.

On the competition ground

This year we had to continue to work faster in order to welcome 1st January 2014, when the right to the public supply lose the users that are not households and small customers.  These are the customers of the medium voltage electricity that lose the right to the public supply, but at the same time they get the privilege to choose their supplier, if that’s a privilege, in the circumstances when the regulated price of electricity in Serbia is 28.5 euros per megawatt-hour, while the market price is 45 euros.

Whatever the conclusion regarding the prices was, a legal right for four thousand users on the medium voltage electricity to choose the supplier will be in force from the beginning of next year. Comparing to 3.5 million electricity final customers in Serbia, this number is not so large so that the preparations have to be done in a hurry. However, as it was explained to us, the number of users is not important here, but the shares on the market are. It is important that in Serbia 60 % of the market will be regulated next year and the rest will be free.

In the Department for Electricity Trading of EPS that relation is expressed in terawatt hours. They quote that 13 terawatt hours of total 34 of annual consumption of electricity will be placed on the market conditions. This is the part for which the competition prices will be valid.

The Ministry of Energy, Development and Environmental Protection and the Serbian Government have adopted the appropriate decisions and decrees, and the Energy Agency has given the licenses and the preparations in EPS have thoroughly being done according to those decisions and standards for electricity supply by the EPS group in order to be organized in a way to respond to the basic requirements of the deregulated market – to achieve a progress both for the customers and the company.

The management of EPS, with the approval of the competent authorities, has chosen the integration of the supply activities the moment when it became obvious that PE “EPS Supply”, beside the license for the public supplier, will obtain the supplier license. EPS already has that license on which basis the Department for Electricity Trading have been selling and buying the electricity since 2006. At the beginning of this year, this Department has opened the door of the open market in Serbia by arranging the supply of the users of the high voltage electricity that lost the right to public supply.

Company “EPS Supply” will enter the ground of the competition next year, when it will start selling not only the medium voltage electricity, but also the high voltage electricity, as it is planned for now. They can, actually, fight for all the final customers on the market in Serbia except for the households and small customers that will be able to choose the supplier or to remain on public supply since the beginning of 2015.

Regarding to our question which part of the trade remains in the Department for Electricity Trading, we were told that this Department will remain the producers’ electricity trader, which will, according to clearly defined contracts, sell electricity to all companies of EPS for the needs of their activities including the “EPS Supply”. The Department for Electricity Trading will also continue selling buying the electricity in order to optimize and balance of the power portfolio, i.e. selling and buying during the entire year, and its goal is to achieve buying and selling outside the system of EPS in every hour. In this part of the trade, which will be done under the conditions of the open and competitive market, its procurements don’t subject to Law on the Public Procurements, i.e. the obligation to announce a public call, which limited the profit of EPS on the energy market in the past few years.

Final customer

The Energy Law says: “Final customer is a legal or natural entity or entrepreneur buying electricity or natural gas for his own needs.” It doesn’t matter whether they are the customers that have the right to public supply or those that has lost that right (or will lose it); all the customers of electricity and gas are the final customers. The most important difference that shows their status is the energy price. When it comes to electricity, the price can be regulated (higher), or on the free market contracted (lower for now).

Two prices

EPS “Supply” will supply the final customers on the free market according to the prices of electricity which are determined by EPS for that market. For the customers that after 1st January 2014 stay on the public supply (households and small customers), the regulated prices of electricity will be valid which are determined by the Energy Agency.

Source; Serbia Energy

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