State of compliance
The transmission system operator of Albania OST was unbundled according to the ownership unbundling model enforced by the Power Sector Law. The Ministry of Infrastructure and Energy is the sole shareholder in the incumbent production company KESH and supply company OSHEE, while the Ministry of Finance and Economy is the sole shareholder of OST.
OST was certified by ERE in March 2017, and in April the same year acquired membership in ENTSO-E. Nevertheless, some of the conditions requested by the Secretariat in its Opinion 01/17 and included in the Certification Decision of ERE are not implemented by OST and, upon request from OST the deadline for their completion of March 2018 was postponed by ERE for March 2019.
In January 2018, the Secretariat opened an infringement case against Albania for the lack of unbundling of the distribution system operator (Case ECS 04/17). In March, OSHEE established three subsidiaries tasked to operate respectively as a distribution system operator, a universal service provider and a supplier of consumers on the market. However, the assets remain in state-owned OSHEE and the newly formed companies are still missing the required financial and operational resources. The authorities initiated a lengthy process of capacity building. No compliance officer is appointed and no compliance programme is in place.
Access to the system
Access to the system
Conditions for third party access to the transmission and distribution networks and provisions for congestion management on cross-border lines are transposed by the Power Sector Law in compliance with the acquis. In November 2017, ERE approved new tariff methodologies for transmission and distribution. New tariffs for 2018, approved by ERE in December 2017, were published by ERE, OST and OSHEE.
Cross-border transmission capacities on the borders with Montenegro and Greece are allocated via a regionally coordinated platform of the SEE CAO. The capacity on 220 kV lines on the border with Kosovo* is allocated through split auction procedures applied by OST and the transmission system operator of Serbia, EMS. The 440 kV interconnection line on the same border is not utilized yet.
Rules and procedures for construction of direct lines, including with consumers outside Albania, have been in force since January 2017.
The Power Sector Law deregulated the prices for electricity generation and wholesale in 2015.
However, the regulated wholesale contract between KESH and OSHEE is still being applied, at least until the end of 2018. The Council of Ministers’ Decision of March 2016, as amended, imposes a public service obligation on OSHEE and KESH to provide, through a mutual contractual arrangement, the electricity required for supply of customers under universal service, or to compensate the price offset for the quantities of electricity purchased for the same purpose on the market. Contrary to the Market Model, which promotes these companies as liquidity providers, the non-compliant administrative decision on public service obligation effectively curtails the access of both KESH and OSHEE to the free market and breaches the acquis.
In February 2018, the required set of amendments to the Power Sector Law was adopted providing a governance framework for the establishment of the Albanian power exchange APEX. The market operator is identified as the responsible body for organising and operating APEX. According to the amendments of the Power Sector Law of March 2018, the Council of Ministers’ Decision on the establishment of the market operator, its legal form and ownership structure, has to be adopted by September 2018.
The Power Sector Law and the Market Model request market-based, non-discriminatory and transparent procedures for purchasing of balancing services. Transitional balancing rules were adopted by ERE in November 2017 and applied as of 2018. Imbalances are settled using reference hourly prices from the Hungarian day-ahead market. Although the rules allow for new entrants to the balancing market, KESH is still the sole service provider.
In July 2017 ERE adopted Rules on publication of basic electricity market data, transposing the Transparency Regulation. OST is publishing on its website part of the required data on load, generation, transmission infrastructure and imbalances, while SEE CAO forwards the data on cross-border capacity to ENTSO-E for publication.
According to the Power Sector Law, all customers are eligible and the prices charged to all consumers except those connected to the low voltage (0.4 kV) network should have been deregulated. In practice, customers have not yet switched their incumbent supplier, apart from high voltage and some 35 kV customers.
The main reason for the insignificant switching rate is the amendment to the Power Sector Law of February 2018, which extended the period of last resort supply service, available to those eligible customers who failed to switch from their regulated supply, by two years as of the date they have fulfilled their technical preconditions for switching. This intervention virtually stalled the process of retail market liberalization by up to two years. The measure introduces legal ambiguity with respect to the role and format of the supply of last resort service and counteracts any measure aimed to foster market opening. Consequently, the retail market remains effectively foreclosed despite the formal deregulation.
OST purchases the energy to cover losses in a competitive procedure through a transparent electronic platform. OSHEE shall use an organised platform for purchasing electricity only in the case that it cannot be procured by KESH, which has not yet happened in 2018. The organised platform is used by OSHEE for purchasing electricity for supply of last resort only.
The Power Sector Law transposes the Third Package provisions for protection of customer rights. Vulnerable customers are identified and the Ministry of Social Affairs allocates financial support from the state budget.
The transmission system operator should procure balancing services using market-based, non discriminatory and transparent procedures, including through cross-border cooperation, in accordance with the Power Sector Law and the market model adopted in 2016. However, the (provisional) electricity market rules currently applied are not in compliance with Articles 15(7) and 37(6)(b) of Directive 2009/72/EC. Instead of a functional balancing market, the procurement of balancing services by OST is based on a regulated annual contract with KESH. The imbalance settlement mechanism is implemented in a discriminatory manner following the decision of ERE to exempt KESH from balance responsibility. This is in breach of the Energy Community requirements. Activities to adopt new balancing rules and establish a market-based balancing mechanism in Albania are ongoing.
The Power Sector Law defines the obligation for data publication, however, without transposing Regulation (EU) 543/2013 completely. A secondary act on data publication, drafted by the regulator with a view to transpose the regulation fully, still needs to be adopted.
Data on load forecasts, transmission infrastructure, installed generation capacity and imbalance prices and volumes are published on the OST website. However, most of the data required by the Regulation are still missing. Data on unavailability of transmission capacity are submitted directly to ENTSO-E, while the remaining capacity allocation data are submitted to ENTSO-E by SEE CAO. No data on market performance as required by the Regulation are published.