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MACEDONIA

 

Energy Regulatory Commission (ERC)                  

 

Basic Information:

Title

Energy Regulatory Commission (ERC)

Established in

2003

Organizational structure

The legal framework for establishment and operation of the Energy Regulatory Commission of the Republic of Macedonia (ERC) is provided by the Energy Law. ERC is comprised of five Members, one of which is the President. On the proposal from the Government of the Republic of Macedonia, the Parliament of the Republic of Macedonia appoint and dismiss the Members and the President of the ERC, taking due consideration of the appropriate and equitable representation of all ethnic communities. Term of office for Members or the President of the ERC is five years and none of the Members can hold the position for more than two terms of office.

In accordance with the Rulebook on the organization and systematization of the job positions and tasks of the employees of the ERC, the organizational structure of the ERC is:

-          Natural gas, liquid fuels and district heating Department;

-          Electricity Department;

-          Legal Department,

-          Economic Department,

-          Energy Markets Monitoring Department, and

-          Administrative, Financial and General Affairs Department

The Rulebook determines the total number of employees in ERC at 47 persons (5 Members of the ERC and 42 employees), By 08.02.2016, there are 31 employees as follows:

-          Members of the ERC: 5;

-          Staff: 26.

Number of Commissioners

5

Number of staff

26

Budget

The operation of the ERC is financed by own funding sources, secured by means of charges collected on the basis of license issuance and collection of annual charge levied to the holders of energy activity licenses. By 1st October in the current year the latest, ERC submits to the Parliament of the Republic of Macedonia the proposed Financial plan of the Energy Regulatory Commission for the next calendar year, for approval.

The Financial plan of the Energy Regulatory Commission for the year 2016 was approved by the Parliament of the Republic of Macedonia and the annual charge for 2016 is set at 0.052 %.

Responsibilities

ERC regulates electricity, natural gas, district heating and oil and oil derivatives sector.

According to the Energy Law, for the purpose of securing efficient, competitive and uninterruptable operation of energy markets, ERC has the following competences:

-          monitor the operation of energy markets, for the purpose of securing reliable energy and energy fuel supply;

-          adopt regulations and tariff systems and adopt or approve tariff-setting methodologies for regulated energy activities;

-          adopt regulations, price-setting and tariff system methodologies on relevant energy type and/or energy fuel delivery to captive consumers;

-          adopt decisions on prices and tariffs, based on relevant regulations, methodologies and tariff systems;

-          adopt regulations on price-setting methodology for oil derivatives and fuels for transport and price-setting decisions for oil derivatives and fuels for transport, pursuant to the commitments assumed by the Republic of Macedonia;

-          approve the Gird Codes adopted by the energy system operators, by taking due consideration of their compliance with the commitments the Republic of Macedonia has assumed under the international treaties or the commitments of the energy system operators stemming from their membership in international associations;

-          on the proposal from the relevant energy system operators, approve the terms and conditions and connection and access charges for relevant transmission and distribution systems;

-          adopt Electricity Supply Rules, Heating Energy Supply Rules and Natural Gas Supply Rules;

-          adopt Rules on Electricity Supply of Last Resort and Natural Gas Supply of Last Resort;

-          adopt the Electricity Market Code and the Natural Gas Market Code;

-          when needed, request relevant system operators or electricity market operator to change terms and conditions, tariffs, rules, mechanisms and methodologies governing the connection to, access to, balancing or use of relevant systems or market;

-          take decisions upon applications submitted for exemption from the obligation on allowing third party access to energy systems or new interconnection gas pipelines;

-          keep the Registry of Preferential Generators and adopt decisions on awarding the status of preferential generator;

-          take due care for the protection and promotion of rights of energy and energy fuel consumers and of energy system users;

-          propose measures aimed to encourage competition on energy markets;

-          stipulate the terms and conditions, manner and procedure and adopt decisions on issuing, altering, transfer, suspension, revoking and termination of separate energy activity licenses and monitor the implementation of obligations stipulated in the energy activity licenses issued;

-          approve transmission and distribution grid development and construction plans and monitor their timely adoption and implementation;

-          approve and monitor the implementation of compliance programs adopted by relevant energy system operators, by means of which they secure full legal, financial, management and operational independence of operation from the vertically integrated energy companies to which they belong, as well as from related energy companies;

-          resolve disputes occurred between entities performing regulated energy activities and their users, including cross-border disputes;

-          cooperate with competent state authorities, local self-government unit bodies, entities performing energy activities, energy users and other organizations and institutions;

-          submit proposals to competent authorities on taking measures pursuant to their competences and in a procedure stipulated by law, against entities performing their activities in violation to the present law;

-          raise initiatives and propose adoption of new and amendments to existing laws and other regulations in the energy field;

-          participate in relevant regional and international organizations and cooperate with other regulatory bodies, for the purpose of contributing to development of regional energy markets, pursuant to the commitments assumed under the ratified international treaties;

-          adopt the Book of Operation and other internal acts related to its operation; and

-          perform other matters pursuant to the present law.

 

With the new Law on Setting Prices of Water Services and Amendments of the Energy Law, from January 2016, the Energy Regulatory Commission was entitled with new competences in the field of regulating prices of water services, i.e. setting up tariffs for the supply of drinking water, collection and disposal of urban wastewaters, as well as purification of wastewaters.

Authorities

Independence: ERC is an independent authority regarding the operation and decision making process within the scope of competencies prescribed by the Energy Law.

Supervised by: The operation of the ERC is supervised by the Parliament of the Republic of Macedonia.

Reports: By 31st March in the current year the latest, ERC submits to the Parliament of the Republic of Macedonia the Annual report on its operation for the previous year for adoption. The Annual report contains detailed information on activities according to the authorities, as well as detailed information on the material and financial operations of the ERC. ERC submits its Annual report to the Government of the Republic of Macedonia and the Ministry, for information purposes. On the request from the Government of the Republic of Macedonia or the Minister, ERC submits other reports and information pertaining to the field of operation of the ERC and relevant for the performance of matters falling under the Government and the Ministry as stipulated by the Energy Law. Appeal process: ERC is an independent authority regarding the operation and decision making process. The operation and issuing of bylaws and decisions are determined by the Energy Law, other bylaws, the Statute and Book of Operations of the ERC. The bylaws and the decisions of ERC are published at the “Official Gazette of the Republic of Macedonia”, and on the ERC’s web site: www.erc.org.mk. Appeals against individual acts of the ERC can be lodged in front of the Appeals Commission for Matters in the Energy Field, within a period of 15 days from the publication of the ERC’s act. The appeal shall not postpone the execution of the decision taken by the ERC.

Legal basis

Energy Law (“Official Gazette of the Republic of Macedonia”, no. 16/11, 136/11, 79/13, 164/13, 41/14, 151/14, 33/15, 192/15, 215/15 and 6/16)

Law on Determining Prices of Water Services (“Official Gazette of the Republic of Macedonia”, no. 7/16)

Contact

“Dimitrie Cupovski” No.2, 4th floor, 1000 Skopje, Macedonia

Tel.: +389-2-3233-580 | Fax: +389-2-3233-586

E-mail: erc--.at.--erc.org.mk

Website

http://www.erc.org.mk

http://www.erranet.org/AboutUs/Members/Profiles/Macedonia

 

Market Information – (Information current as of February 2016):

Population

2.067.471 (30.6.2014), source: State Statistical Office)

GDP/Capita

€ 4.126 (for 2014, source: State Statistical Office)

Generation of electricity

In 2015 5.098 GWh:

TPP:  3.140 GWh

HPP:  1.516 GWh SHPP:  109 GWh

CHP:  178 GWh electricity

PV:  40 GWh

WPP: 115 GWh

Electricity Market Size

 7.413 GWh (total consumption in 2014)

Installed capacity

Total:  2.041 MW

(TPP:1010 MW, HPP –  603,2 MW, SHPP –  84 MW,

CHP: 287 MW, PV:  16,67 MW; WPP: 36,8 MW, BGPP: 3,99 MW)

Surplus Installed Capacity over Demand

_

Net Electricity Importer

  2.656 GWh (import in 2014)

Natural Gas Imported

135.946.902 nm3 in  2015

Natural Gas Consumed

135.946.902 nm3 in  2015

Natural Gas Reserves

-

Electricity Market Structure

In March 2004, the Law on restructuring of JSC ELEKTROSTOPANSTVO NA MAKEDONIJA – vertical integrated company for generation, transmission and distribution of electricity was brought, by which the company was divided into 2 companies:

•          JSC MEPSO – state owned company for transmission of electricity, and

•          JSC ELEKTROSTOPANSTVO NA MAKEDONIJA – state owned, vertical integrated company for generation, distribution and supply with electricity.

In 2005, JSC ELEKTROSTOPANSTVO NA MAKEDONIJA – state owned, vertical integrated company for generation, distribution and supply with electricity was separated into 3 companies:

•          JSC ELEM – state owned generation company;

•          JSC TPP Negotino - state owned generation company; and

•          JSC ESM Distribution – state owned distribution and supply company.

On 17th of March 2006 the Government of the Republic of Macedonia announced that the Austrian company EVN AG was the winner on the tender for sale of majority package of shares in JSC ESM Distribution.

 

JSC “Elektrani na Makedonija” (JSC ELEM) is share hold, state owned company holder of the license for performing the energy activity: generation of electricity.

JSC Negotino is electricity producer that is engaged by MEPSO for electricity production, power and ancillary services and as a reserve in the power system.

TE-TO JSC Skopje is share hold, private owned company, holder of the license for performing the energy activity – combined generation of electricity and heat.

KOGEL JSC Skopje is share hold, private owned company, holder of the license for performing the energy activity – combined generation of electricity and heat.JSC MEPSO is share hold, state owned company, holder of the licenses for performing the following energy activities: transmission of electricity, operation of the power system, operation and organization of the electricity market.

JSC EVN MAKEDONIJA (90% by EVN – Austria, 10 % state owned) is holder of the licenses for performing the following energy activities: operation of the distribution system and distribution of electricity, generation of electricity, retail supply of electricity for tariff customers, and supply of electricity of last resort.

JSC ELEM Podruznica Energetika is state owned company, holder of the licenses for performing the following energy activities: operation of the distribution system and distribution of electricity and retail supply of electricity for tariff customers.

The customers (257 companies) that have more than 50 employees and total annual income or total assets more than 10 million EUR in MKD counter value, have concluded non –regulated agreements for purchase of electricity and supply their needs on the electricity market from the electricity suppliers at freely negotiated prices. They do not have the right to be supplied from the electricity supplier of last resort and from the electricity supplier for tariff customers.

The quantities of electricity to cover the losses in electricity transmission system and distribution systems are purchased on the open electricity market.

Approximately 45 %-50% of the total electricity consumption in the Republic of Macedonia is provided on the open electricity market.

Currently, there are 63 registered electricity traders and 19 electricity suppliers with valid licenses issued by ERC.

According to the latest changes of the Energy Law, the process of liberalization of the electricity market for households and small customers will be gradually implemented in the period 2015-2020.

 

The bylaws on electricity prices and tariffs determine objective and non-discriminatory criteria for justifiability assessment of costs necessary to perform the regulated energy activity, taking due consideration of improved efficiency in the operation of companies performing regulated energy activities.  ERC determines:

•          regulated maximum revenue and price for performing regulated energy activity electricity generation to JSC ELEM,

•          regulated maximum revenue and average tariff for performing regulated energy activity transmission of electricity to the Transmission System Operator, JSC MEPSO,

•          regulated maximum revenue and regulated average tariff for performing regulated energy activity organization and operation of the electricity market, to the Transmission System Operator, JSC MEPSO,

•          regulated maximum revenue and regulated average tariff for performing regulated energy activity distribution of electricity to JSC EVN Makedonija,

•          regulated maximum revenue and price for performing regulated energy activity electricity supply to tariff consumers to JSC EVN Makedonija–Skopje.

 

The average price for electricity supply to tariff customers connected to the distribution system of JSC EVN Makedonija – Skopje for the year 2015 was decreased (applied from 1st of July 2015) and it is  5,02MKD/kWh (81,63 €/MWh).

 

Natural Gas Market Structure

There are no domestic sources for production of natural gas and the supply of natural gas comes from imports. Gas has been imported from Russia since 1997, via a pipeline (capacity 800 million m3).

Gas is used in the largest percentage by the industrial customers directly connected on to the transmission system and for district heat generation and in smaller percentage by the industrial customers connected on to the distribution system. A study for natural gas transmission development envisages further gasification as well as the establishment of interconnectors with all neighboring transmission systems. Also the feasibility study for natural gas distribution development at the state-level envisages further gasification in the cities.

The company GA-MA JSC Skopje is license holder for performing energy activities natural gas transmission and operation of the transmission system, and the companies Direction for Technological industrial development zones – Skopje (DTIDZ), Public company Kumanovo Gas - Kumanovo and Public company Strumica Gas – Strumica are license holders for performing energy activity natural gas distribution, operation of the distribution system and supply with natural gas for tariff customers connected to the natural gas distribution system.

In accordance with the Energy Law, all natural gas customers are eligible, after the entering into force of the bylaws from article 203, paragraph 1 from Energy Law. ERC adopted all bylaws prescribed by the article 203, paragraph 1 of the Energy Law, including Natural Gas Market Rules. The Natural Gas Market Rules applied from 1st of January 2015, and for that purpose ERC issued licenses for supplier of natural gas and supplier of natural gas in last resort. ERC undertook all necessary measures prescribed in the Energy Law and natural gas bylaws regarding liberalization of natural gas market which started from 1st of January 2015. ERC determines:

-         natural gas sale price to MAKPETROL PROM-GAS Skopje, as license holder for the energy activity supply of natural gas of last resort,

-         regulated tariff for performing regulated activities distribution of natural gas and supply with natural gas to customers connected on the system for distribution of natural gas of the Public company Strumica Gas – Strumica

-         regulated maximum revenues and tariffs for performing energy activities transmission of natural gas and operation of the transmission system of natural gas for JSC GA-MA Skopje,

-         tariff for distribution of natural gas and supply of natural gas to the consumers connected to the natural gas distribution system of the Direction for Technological industrial development zones – Skopje (DTIDZ),

 

The tariff for performing energy activities transmission and operation of the transmission system of natural gas for JSC GA-MA Skopje for the year 2016 was increased for 3,53%, and the tariff for performing regulated activity distribution of natural gas and supply with natural gas to tariff customers connected on the system for distribution of natural gas for DTIDZ – Skopje for the 2016 was decreased by 12,72%, compared to the year 2016.

 

Current Energy Issues

ERC is beneficiary of the project “Support to the Energy Regulatory Commission of the Republic of Macedonia for implementation of the Third Energy Package in Republic of Macedonia”. This project is supported by the Kingdom of Norway, Ministry of foreign affairs, and implemented by the University “Ss Cyril and Methodius”- Skopje, Faculty of Electrical Engineering and Information Technologies. The focus of the 3 years project, which started in December 2014, is supporting ERC’s activities in the process of implementation of the new Energy Law and EU legislation on internal energy market.

AD MEPSO (TSO) in January 2016 put into operation a new 400 kV cross-border electricity interconnection between Macedonia and Serbia. This project is of great strategic importance because it connects two neighbouring electricity power systems of the corridor North-South.

 

AD MEPSO (TSO) in January 2016 launched a tendering procedure for the construction of Macedonia - Albania Transmission Project, Phase 1. The Project will enable AD MEPSO to construct the Macedonian portion of the planned 400 kV cross-border electricity interconnection between Macedonia and Albania, the first interconnection between the two countries, and the introduction of grid efficiency improvements to the MEPSO's infrastructure. The Project will provide crucial cross-border infrastructure, delivering transition impact through the expansion of competitive market interactions and setting standards for corporate governance and business conduct.

Construction of the gas pipeline section Klecovce-Bloc Station 5 is in advanced phase and by the end of 2016 is expected to be finalized. Other projects for construction of transmission gas pipelines from Skopje to Tetovo and Gostivar, as well as from Stip to Negotino and Bitola are in the tendering procedure led by Macedonian Energy Resources (MER).

 

 

 


Contact Information:
Address: “Dimitrie Cupovski” No.2, 4th floor, 1000 Skopje, Republic of Macedonia
Tel.: +389-2-3233-580 | Fax: +389-2-3233-586
E-mail: erc--.at.--erc.org.mk
Web: http://www.erc.org.mk

 

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