Successfully settled disputes

The Energy Community Secretariat agreed on the application by the principles of mutual recognition of licenses and reciprocity with the Energy Regulatory Office in Kosovo*, ERO. Based on the understanding reached with ERO, German based market participant, Statkraft, can become participant in the wholesale electricity market in Kosovo without requiring a license.

Deputy Director Dirk Buschle said: "ERO took a fair and responsible decision on the basis of Kosovo* and Energy Community legislation. This precedence should open the door to other market participants from EU Member States and Contracting Parties of Energy Community to register as market participants and perform their activity in the electricity market in Kosovo* without a local establishment requirement. The Secretariat is currently working on proposals for rules which will extend the principles of reciprocity and mutual recognition to all countries in the Title III region."

The dispute between Gas Natural Fenosa, Moldova’s largest supplier and distributor of electricity, and the Government of Moldova arose from deviations between the costs of purchasing electricity and the regulated electricity tariff. Following the initiation of ICSID arbitration proceedings by Gas Natural Fenosa against Moldova, Deputy Director Dirk Buschle was appointed by both parties as facilitator of the negotiations in February 2015.  The negotiations took place in Chiṣinău.

The settlement agreement signed on 3 June 2016 between Gas Natural Fenosa and the Government of Moldova was the first step to bring to an end a months-long dispute. 

Following the signature of the settlement agreement, Deputy Director Dirk Buschle said: "On behalf of the Energy Community Secretariat and in my capacity as facilitator of the negotiations between Moldova and Gas Natural Fenosa, I highly welcome the agreement between both parties signed on Friday evening. The agreement will help stabilize a sector which suffers from a systemic vulnerability unmatched in Europe and has witnessed financial turbulences in the past few years. Not acting upon the resulting deviations in the electricity tariff would have led to protracted legal disputes and negatively affected Moldova’s reputation as an investment destination and a reliable partner for international organizations."

"I felicitate in particular the Government which had the courage to change the negative path of action and open the possibility for further reform and support. With today’s agreement, Moldova has shown that it takes its membership in the Energy Community seriously not only in the letter but also in its spirit. The ball is now with the regulatory authority ANRE to implement today’s agreement and with the international community to help ending the country’s dependence in its electricity and gas supply and infrastructure.”

The full implementation of the settlement agreement followed shortly in October 2016.  Fulfilling the terms of the settlement agreement, Gas Natural Fenosa reached amicable agreements with state power companies and the Moldovan energy regulator published a mechanism for the recovery of the tariff deficit.  The regulator will have to adopt increased tariffs as of 1 January 2017, so that the tariff deviations can be effectively recovered.

In a letter to the Secretariat, Jose Luis Gomez Pascual, President and Country Manager of Gas Natural Fenosa Moldova, thanked the Secretariat for “providing a common ground for the development of options to solve this major issue that threatened to put the electricity system of Moldova on the verge of extensive power outages.”

Under the auspices of the Energy Community Secretariat and the European Commission, representatives of the electricity transmission system operators of Serbia (EMS) and of Kosovo* (KOSTT) agreed on the terms of an agreement on principles for their future cooperation in Vienna on 10 December 2013. The agreement, which has been proposed to the respective authorities for signature, dealt with operational and commercial aspects in the relations of both companies.

On 12 February 2014, a Framework Agreement governing the operational and commercial relations between EMS and KOSTT was signed by both companies’ general managers. The legally-binding Agreement constituted a milestone in normalizing the relations between the two electricity system operators. 

The negotiations of the Framework Agreement were facilitated by the Secretariat’s Deputy Director Dirk Buschle and his team together with experts from the European Commission. Director Janez Kopač of the Secretariat expressed his satisfaction about the signature: “This Agreement is not only of bilateral relevance. It will unblock many serious obstacles which so far have prevented regional integration of the electricity markets in South East Europe.” 

Later on, on 16 September 2014, KOSTT and EMS signed a so-called Inter-TSO Agreement on network and system operation management. The Agreement, negotiated under the auspices of the Secretariat and with the support of the European Commission, brings to an end a controversy between the two operators on their bilateral relations dating back to the beginning of this century. The Inter-TSO Agreement and its technical annexes implement the operational part of the Framework Agreement signed by both parties in Vienna earlier that year. 

“Today’s signature is a milestone in the cooperation not only between two companies but also for the normalisation between these Contracting Parties,” said Deputy Director Dirk Buschle. Director Janez Kopač added: “Both companies and governments have shown great responsibility and opened the path for better regional integration of the South East European electricity markets. We hope to build on this encouraging development in the near future with fostering the Coordinated Auction Office and other projects of regional importance.”

These next steps involve the finalisation of further agreements between EMS and KOSTT, covering the compensation for transit flows and congestion revenues for this year, as well as discussions about KOSTT becoming a member of the European Network of Transmission System Operators (ENTSO-E). 

The Settlement Agreement signed in Vienna ends the 18-month long dispute between the Republic of Albania and the Czech energy utility ČEZ following the Albanian regulator’s decision of 21 Jan 2013 to revoke the license of CEZ Shpërndarje. Following the initiation of arbitration proceedings by ČEZ in 2013, Deputy Director Dirk Buschle of the Secretariat was appointed by both parties as facilitator of the negotiations, which have taken place at the Secretariat’s premises as of Jan 2014. 

Statement by Deputy Director Dirk Buschle: "On behalf of the Energy Community Secretariat and in my personal capacity as mediator of the negotiations between Albania and ČEZ, I highly welcome the Settlement Agreement between both parties signed yesterday. I am deeply convinced that entering into and concluding these negotiations are in the best interest of Albania and its electricity consumers".

“Years of neglecting the energy sector left the Albanian energy sector in a very bad shape, with an unsustainably high share of electricity not paid for, the State-owned companies in serious financial difficulties, and investor confidence alarmingly low. In this situation, settling the dispute with ČEZ was the only sensible move. Costly arbitration proceedings with an unclear outcome would have created a long period of uncertainty and instability. By preventing the urgently needed deep reforms, they would have taken the whole energy sector hostage and created liabilities far higher than what was settled by yesterday’s agreement".

"From many talks during the recent months, I know that private investors and public institutions alike would have been more than reluctant to support a country with these open legal and financial liabilities. Stability and the good reputation of Albania’s energy sector needed to be restored as an indispensable first step to turn the sector around. For this reason, the Energy Community so actively supported the negotiations during the last six months. It will continue to do so during the upcoming reforms which can now begin. I am very pleased that in concluding these negotiations the Albanian Government set the long-term interests of the country above the short-term desire for legal confrontation.”