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First licences for electricity trading issued to non-Croatian companies in Croatia

Published

April 27, 2016

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Published:

April 27, 2016

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0

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By Vanesa Vujanić, Attorney-at-Law and Partner at Vujanić Law Office

Surely, one of the reasons for up to date more timid entrance of foreign electricity trading companies to the Croatian wholesale electricity trading market was a prerequisite for such companies to establish Croatian subsidiary in order to obtain electricity trading license from the relevant authority, i.e., Croatian Energy Regulatory Agency (“HERA”). Probable beginning of an end of such timid activity occurred last March when three non-Croatian companies, i.e., ČEZ, a. s., Holding Slovenske elektrarne d.o.o. and DANSKE COMMODITIES A/S were awarded with the respective (wholesale) electricity trading licenses. Each license was issued for a period of 3 years calculating as of the moment in which the license becomes fully final and valid.

The timing of the issuance of electricity trading licences coincided with the historical launch of Croatian Power Exchange (CROPEX) day-ahead market which was successfully realised on February 10, 2016. This launch was preceded by the (i) adoption of the 2013 Electricity Market Act following which the Croatian Energy Market Operator (“HROTE”) and Croatian Transmission System Operator – HOPS have in May of 2014 established a joint venture company – Croatian Power Exchange Ltd., and by the adoption of the (ii) Rules on Organization of Electricity Trading Market.

The launching of the CROPEX day-ahead market “represents historical date for power market development in Croatia, providing for the first time ever wholesale market price as well as transparent, liberalized and competitive trading environment for benefits of Croatian, as well as EU and Energy Community countries market participants.

In accordance with the mentioned Electricity Market Act, electricity trader coming from EU/ Energy Community member states wishing to participate as trader on the Croatian electricity market is obliged to obtain respective energy license from HERA. However, HERA may issue energy license to such traders under more simplified rules than those set out for the Croatian applicants who have to comply with a set of technical, professional and financial qualifications. The reason why HERA has not issued an energy trading license to such traders before March 2016 was in the fact that the relevant by-law regulating the procedure of such issuance and identifying the documents which must be submitted to HERA alongside with the application has not been adopted until several months ago.

The simplified procedure is set out in the Energy License Regulation. This by-law requires the foreign (EU/Energy Community) companies to fulfil certain requirements, including being an active trader in the country of their origin, obtaining respective security instrument, and delivering other relevant documents as set out in the subject by-law and relevant guidelines.

Few other issues with respect to the EU/Energy Community companies undertaking electricity trading activity in Croatia still remain but these are not related to their ability to obtain the license from HERA or to further regulate their legal position with relevant authorities including HROTE, HOPS and CROPEX.

Joining of other electricity traders on the Croatian market together with further growth of trading activities on CROPEX should contribute to the further development of the Croatian electricity trading market.

We would therefore like to conclude this article with the statement of the CROPEX’s CEO, Mr. Silvio Brkic, who said that the launching of the CROPEX day-ahead market “represents historical date for power market development in Croatia, providing for the first time ever wholesale market price as well as transparent, liberalized and competitive trading environment for benefits of Croatian, as well as EU and Energy Community countries market participants. This accomplishment is committing us to make our best in continuing with started activities aimed at fully integrating Croatian power markets into EU single Day Ahead and Intra-Day power markets”.

For more information on the above, please contact Ms. Vanesa Vujanic, Attorney-at-Law and Partner at Vujanic Law Office – vanesa.vujanic@vujaniclaw.hr

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