Electricity

Impact of 2021 electricity price surge on Energy Community contracting parties

Impact of 2021 electricity price surge on Energy Community

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Published

December 14, 2021

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Published:

December 14, 2021

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Households and small businesses in the Energy Community contracting parties have been protected from the high electricity prices, unlike industrial consumers. Albania, North Macedonia, and Kosovo* are spending vast amounts of money on imports while electricity producers in BiH enjoy record incomes, according to the paper Impact of the electricity price surge in Energy Community Contracting Parties and measures undertaken.

The document, prepared by the Electricity Working Group (EWG) of the Energy Community Regulatory Board (ECRB), summarizes the measures taken by all nine contracting parties including Albania, Bosnia and Herzegovina, Kosovo*, North Macedonia, Montenegro, and Serbia.

The energy crisis, driven by skyrocketing prices of electricity, natural gas and CO2 emissions allowances, is likely to continue at least through the winter season.

Albania, North Macedonia, and Kosovo* are highly impacted by the energy crisis

Net importing countries, namely Albania, North Macedonia, Kosovo*, are impacted by high import prices, whereas producers from net exporting countries, BiH in particular, reported the highest revenues, the paper reads.

For example, in period January – November Albania paid EUR 213 million for electricity imports, while universal supplier OSHEE’s income came in at EUR 480 million.

Power producers in BiH have recorded the highest revenues

It is not a surprise that Albania, and North Macedonia declared a state of emergency and decided on direct financial support to state-owned companies or consumers.

On the other hand, electricity producers in BiH, a net exporting country, have recorded the highest revenues ever during the price surge.

The electricity companies have benefited also from the fact that electricity produced from fossil fuels is not subject to carbon pricing, making them more competitive in the surrounding EU markets, the report underlines.

Universal supply tariffs are likely to increase

According to the paper, a large segment of the markets in the Energy Community contracting parties is still supplied by the universal suppliers.

The ECRB underlined that universal supply tariffs are likely to increase in the next review due to higher wholesale prices (imports) and the increase in network fees.

The regulators report that a move to fully reflect the costs might bring the tariffs to the edge of their affordability, therefore arguing that relief measures by the governments might be the only instrument to keep the tariffs at the affordable level, the paper reads.

The balancing rules must be reviewed

According to the report, TSOs and DSOs are to some extent impacted, in particular where network losses are procured on the market. It means network charges are likely to increase in the next tariff review by regulators.

The Serbian TSO already did, and others are likely to review the balancing rules and increase the level of financial guarantees to cover the exposure on balancing market, the paper stresses.

The ECRB underlined that the regulators need to ensure that the balancing mechanism delivers balancing and imbalance prices that reflect the scarcity in the market and eliminate perverse incentives from the market operation.

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