Macedonia failure to
liberalise electricity market in line with binding Energy Community deadline,
27 Apr 2015
Today the Energy Community Secretariat
submitted a Reasoned Opinion as the next step in the dispute settlement case
against the former Yugoslav Republic of Macedonia for its postponement of
electricity market opening. The Director of the Energy Community Secretariat
said: “Macedonia’s decision to postpone full opening of the electricity
market and thereby prohibiting consumers to choose their supplier is another
manifestation of the current government’s deliberate policy of systematically
refusing to accept the country’s obligations under the Energy Community Treaty
and, consequently, EU law.
This trend has recently become more and
more visible and manifests itself in several open breaches of Energy Community
law, including among others also the non-acceptance of a binding target for
renewable energy and the failure to respect Second and Third Energy Package
rules in the gas sector when cooperating with Russian partners. The current
problems in the energy sector mirror other problems of the country – the
growing politicization of state institutions and the dramatically deteriorated
political situation. What we witness is a growing isolation of the country from
the international community”.
In the Reasoned Opinion, the Secretariat
reiterates its view that the amendments to the country’s Energy Law adopted in
October 2014 deprive small businesses and all household customers of their
right to purchase electricity directly from the supplier of their choice by
obliging them to continue purchasing electricity from the incumbent monopoly
supplier after the 1 January 2015 market liberalization deadline set in Energy
Community law. The postponement of full market liberalization until 2020
represents a severe breach of the Treaty establishing the Energy Community.
Open electricity markets are of principal importance for the achievement of the
objectives of the internal energy market. The country is now requested to
rectify the identified issues of non-compliance within a time limit of two
months.
The Government justifies the postponement
of the opening of the market by a risk of “possible drastic increase of the
prices of electricity for the households.” In reality, the argument related to
potential “price shocks” seems to address rather the intended protection of the
incumbent’s liquidity than the protection of household customers from “price
shocks”. This measure is essentially protectionist in nature as it has the
effect of shielding the incumbent supplier from any actual or potential
competition by prolonging its legal supply monopoly for a significant period of
time. Protecting customers from dramatic price increases and ensuring security
of supply is a legitimate aim that could be achieved through measures which are
significantly less market distorting and in compliance with Energy Community
law, i.e. the possibility to impose public service obligations – including
regulation of retail prices for non-household and household customers – on
suppliers.
CASE ECS 02/15: MK / ELECTRICITY
30 Jan 2014, the Secretariat opens dispute settlement case against
Macedonia for postponing market opening
Failure
On 30 Jan 2015, the Secretariat sent an Opening Letter to FYR of
Macedonia for its failure to comply with the Energy Community’s eligibility
rules by postponing full opening of the
electricity market. The Energy Community Treaty sets 1 Jan 2008 as
the implementation deadline for market opening for non-household customers and
1 Jan 2015 for all customers including households. The postponement until 2020
of full market liberalisation represents a severe breach of the Treaty.
Reasoning
The amendments to the Energy Law adopted in Oct 2014 deprive small
businesses and all household customers of their right to purchase electricity
directly from the supplier of their choice. Furthermore, making eligibility
dependent on electricity consumption is non-compliant with the Treaty.
Protecting customers from dramatic price increases is a legitimate aim
that could be achieved through measures which are significantly less market
distorting and in compliance with the Energy Community acquis. Eligibility has to be
distinguished from price regulation and universal service provision might
necessitate regulating the prices for certain categories of customers. The
Secretariat is ready to assist FYR of Macedonia in rectifying the identified
breaches of Energy Community law.
Procedure
According to Articles 6 and 16 of the Rules of Procedure
for Dispute Settlement, interested parties may be granted access to
the case file and may submit written observations on the present case to the
Secretariat within one month from 30 Jan 2015.