Energy Market Liberalisation Produces New Opportunities
The energy market in Slovakia is about to change, while nobody is quite sure yet just how. Here The Daily provides you with its own translation of an article on the subject published on Euroactiv yesterday.
Liberalisation Produces New Opportunities
Discussions are taking place in the Slovak Parliament on the drafts of new laws that will fundamentally change the energy sector. Even though these are based on the Third Energy Package, the exact shape of the measures of implemented directives is supposed to reflect the Slovak reality.
“Implementation of the so-called third package obviously represents the biggest change in national legislation in respect of the energy sector since Slovakia entered the EU”, states Henrich Krejčí, Head of the Energy Law, Regulation and Public Affairs sub-section of the company SPP.
The term for adopting the two directives of the Third Energy Package into national legislation lapsed on 3 March 2011 already, but to the present day some six member states (Bulgaria, Cyprus, the Netherlands, Luxembourg, Romania and Slovakia) have not informed the European Commission (EC) about any measures for transposition of the directives. The EC therefore initiated proceedings against Slovakia on breach of the EU Treaty. At the same time, it registers also incomplete adoption also in the case of other countries.
The drafts of energy bills submitted by the former management of the Ministry of Economy, by which the transposition was supposed to take place, were not supported by Slovak parliament at the beginning of February.
The modified proposals of the Energy Act and the Act on Regulation in Network Industries were approved by the new government at the end of May. At the end of June, they underwent a first reading in the National Parliament.
At the close of this week, MPs in the National Council parliamentary committee for finance, economic affairs and public administration will discuss the draft bills. In the subsequent second and third readings in parliament, some observers predict a lot of revision proposals, while others claims that considering the comfortable majority of the government party, adoption of the draft laws will not be a huge problem.
The rules agreed in the energy package are aimed foremost at supporting competition on the market with energies.
According to information of the regulatory authority RONI, to the end of 2011 some 385 entities had a licence to supply electricity. Of these, 41 offered the supply of electricity for households, while the rest concentrated on the corporate segment. The regulator itself has stated that the rising participation in regional markets, the existing surplus of electricity generation in the region, but also sufficient cross-border exchange of electricity, create a highly competitive market environment.
Despite the broad offer, in terms of the supplied volume of electricity and gas, to the end of last year the traditional suppliers still dominated (ZSE,SSE,VSE for electricity), especially in the segment of households. SPP has maintained an overall 70 percent share on the market with gas.
At present, there are 124 valid gas supply licences issued and 412 licenses for the supply of electricity.
Competition on the market not only increases with the arrival of new suppliers, however, but also because the traditional suppliers are adapting to the new conditions and are extending their portfolio of gas supply services to date to include also electricity, or vice versa. As of this year SPP has been offering electricity to small companies and organisations. This year it will approach also households with the offer of electricity.
The new legislation should significantly reduce the time during which the process of changing supplier takes place – from several months at present to a maximum of three weeks. You can find out more about strengthening the rights of consumers/customers in the interview that EurActiv is to publish on 18 July.
The influence of greater competition on reducing the prices of electricity and gas appears to be one of the weaker sides of liberalisation so far.
“The main disappointment for consumers is that liberalisation of the energy markets does not lead to lower prices, despite all the big promises” warns Monique Goyens, General director of the European Consumers’ Organisation (BEUC) at the meeting of the Citizens’ Energy Forum in October 2011.
Many other factors reflect on the end prices of gas and electricity, however, and not just the competitive battle of suppliers on the national market – from the producer price, through to the stock exchange price, cross-border transfers, regulated fees for transmission, distribution and systemic services, storage, various deviations, the prices of emission allowances, current weather and so on.
Even though the majority of forecasts on the development of energy prices speak about them rising. analyst Milan Hudák claims that at least end prices of electricity will soon start dropping. (EurActiv, 9.7.2012)
According to the draft energy bills, greater supervision and powers for regulator RONI and also the new concepts taken from European directives such as energy poverty and vulnerable customers should prevent an excessive growth in prices for consumers. Their exact definition and limitations are left up to individual member states, however, so that they can take account of their own specific situation, which invokes uncertainty among energy suppliers in particular.
The European Commission itself, in its working document entitled Energy Policy for Consumers, makes reference to various possible definitions and methods of measuring. At the same time, it warns against excessive generalisations and short-term solutions.
Some experts also draw attention to how with excessively strict regulation of the market the alternative players lose the space to adjust their prices compared to the competition, the acquisition of new customers and a change in the share of individual companies on the market away from the dominant supplier towards greater competition.