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Energy Community: Macedonia, BiH fail implementation, Serbia eyed

September 30, 2016

Energy Community: Macedonia, BiH fail implementation, Serbia eyed

According to the latest Secretariat 2016 Annual Implementation Report on the Acquis under the Treaty Establishing Energy Community presented on September 27, Bosnia and Herzegovina and Macedonia may face consequences for not fulfilling obligations according to the Energy Community Treaty, as they didn’t transpose the Third Energy Package, while Serbia is under risk due to several irregularities.

The first two countries „continue to fail in this endeavour“ more than one and a half years after the deadline. The remaining six contracting parties met the condition set by the Ministerial Council, EnC Secretariat said in its report for the year through August. Decisions on dispute settlement cases will be made on October 14 in Sarajevo.

The secretariat’s deputy director Dirk Buschle noted BiH and Macedonia „continue to persistently infringe also other provisions of the acquis“ and, according to him, that is „extremely worrying.“ He added that in spite of „significant assistance by the secretariat and the international community,“ BiH still fails to comply even with the Second Energy Package in the gas sector. „Macedonia has postponed full electricity market opening by five years to 2020. Without doubt, it is the energy consumers who fall victim to the general political impasse in these two countries.”

Stumbling over Kosovo’s status

Serbia is yet to rectify its long-term breaches of Energy Community law, inter alia the lack of unbundling of gas producer and distributor Srbijagas and the non-participation in regionally coordinated capacity allocation, the document notes.The Balkan country was also warned it must facilitate the implementation of the signed the agreement between the domestic transmission system operator (TSO) Elektromreža Srbije and its counterpart KOSTT – Transmission, System and Market Operator JSC in Kosovo. Both parties have delayed obligations from their deal inked in 2014, EnC secretariat underscored.

„The entry into force of the connection agreement between Entso-E and the transmission system operator of Kosovo, signed in October 2015, was unduly conditioned by a supply license being issued to a Serbian supplier in Kosovo. As Serbia has failed to register a supply company, this long-standing dispute still remains unresolved,“ the paper adds. EMS submitted an application to join the Coordinated Auction Office in South East Europe (SEE CAO) but an agreement hasn’t been reached, the report points out and mentions the launch of the Serbian day-ahead electricity market in February as a major event.

Sanctions in pipeline

The report mentions flagship utility Electric Power Industry of Serbia (EPS) hasn’t been transformed into a joint stock company by July 1 as it had been announced.

Janez Kopač, director of the Energy Community Secretariat, said it proposed three measures against Serbia for non-compliance, including the suspension of European funds. He told N1 television time is running out and that the country may face obstacles in EU integration. EMS was earlier asked to join SEE CAO, but the company refused, Kopač stated and added KOSTT is now blocking membership, but not the services contract.

Serbia’s TSO denies irregulaties

EMS denied information on irregularities and claimed accusations came because of one man’s hostility against the company. The TSO insisted it has used income from cross-border capacity according to regulation and that the point of the issue is that the secretariat took a „political stance,“ in contrast to proclaimed neutrality, that interconnections to Macedonia, Albania and Montenegro are with Kosovo and not Serbia. EMS said the dispute in relation to KOSTT’s deal with Entso-E is caused by the unwillingness of the breakaway province’s authorities to register Serbia’s company.

Costs and benefits of stalling

Serbia’s progress in the past year was the greatest in harmonizing regulations in energy efficiency, environmental protection and renewable energy, said Maja Turković, energy consultant and president of Association for Sustainable Development (ASOR). She told the regional television station this was the first time a procedure was escalated to the level of formal irregularities at the ministerial level. Turković stated it is paramount to weigh costs and benefits of stalling in implementation of measures that Serbia took on. It isn’t impossible that the country will get a delay in European Union integration, she stressed.

 

Next step is implementation

Kopač pointed out „effective and efficient implementation“ needs to be ensured within the country members after the transposition of the package. Network codes need to be adopted and applied on interconnection points on the interface between European Union member states and the contracting parties, he said. This will ensure equal treatment and thus remove one of the biggest obstacles to pan-European energy market integration, Kopač explained.

The report added that, as regards the adoption of the sustainability acquis comprising energy efficiency, the environment and renewables, Serbia and Montenegro are the leaders. The latter and Bosnia and Herzegovina have already surpassed the 2020 renewable energy targets, while Serbia and Albania are closely following their indicative pathway to reach the final target, according to the EnC Secretariat.

Overall, implementation is the weakest in the sphere of energy efficiency, where Albania and Ukraine are yet to transpose the Energy Performance of Buildings Directive and Energy Services Directive, while Kosovo is lagging only with the former of the two, the report said.