Electricity

State of Compliance 
 

  • Unbundling

    Unbundling

    Presently, the legislative framework of Georgia does not transpose the requirements for unbundling of transmission and distribution system operators as foreseen by Directive 2009/72/EC. Nevertheless, the obligation to conduct separate accounting is in place. According to the Law of Georgia on Electricity and Natural Gas, when a legal entity holds more than one license, or is engaged in another commercial activity in addition to the licensed activity, it is required to keep separate accounts for revenues, expenses, assets, liabilities, financial outcomes and equity capital for each of the licensed activities and/or other commercial activities.

    The State has almost full control over the transmission system of Georgia and has a minor share in the distribution sector. The network ownership scheme in place does not comply with the requirements for transmission system operator unbundling, as defined by the electricity acquis.

    It has to be noted that the obligation taken under Georgia’s Accession Protocol to the Energy Community Treaty on the transposition of Directive 2009/72/ EC concerning common rules for the internal electricity market by 31 December 2018 has not been met. The Draft Law on Energy and Water Supply was recently submitted to the Parliament, where it is being debated.

  • Access to the system

    Access to the system

    Third party access to the electricity network is guaranteed to certain categories of customers by the legislation of Georgia. The Law on Electricity and Natural Gas provides that persons or legal entities eligible to sell electricity directly to electricity customers shall have access to the electricity transmission and distribution systems of the relevant licensees. Furthermore, the Electricity Market Rules prevent licensed network enterprises from denying interested parties access to their own networks, unless such a refusal is justified by network congestion or non-payment of the network tariff. The network tariff, set by the regulator, is based on the incurred expenses and the volume of transferred electricity.

  • Wholesale market

    Wholesale market

    The existing wholesale electricity market in Georgia is based on bilateral agreements between sellers and buyers, which become effective upon registration with the Electricity Market Operator (ESCO). The wholesale market participants are electricity transmission and dispatch licensees and the so-called qualified enterprises, which include electricity generation and distribution licensees, small power plants, importers, exporters, the electricity market operator and final customers. Any person willing to participate in wholesale trade must register with ESCO. Power generation from strategic facilities (large-scale hydro) is regulated.

    The Electricity Market Rules set the minimum electricity consumption threshold for final large customers to purchase electricity under non-regulated conditions on the wholesale market. Based on changes introduced in the current legislation, the Government of Georgia has defined new criteria for “direct customers”, which buy electricity directly from producers. Based on this regulation, ten new direct customers were identified and for them it has become compulsory to procure electricity directly from the producer. This means that they apply a commercial price negotiated with the seller of the electricity.

  • Retail market

    Retail market

    The electricity distribution and supply activities in Georgia are not separated, which represents a substantial barrier to the development of a competitive retail electricity market. Retail customers are supplied by electricity distribution companies at regulated prices (since unbundling is not applied yet). However, customers have the right to purchase electricity directly from small power plants (up to 13 MW) based on direct agreements at non-regulated electricity prices. Nevertheless, due to the absence of a competitive electricity retail market, non-regulated direct agreements between retail customers and small power plants are not common.

  • Regional integration

    Regional integration

    The electricity system of Georgia is interconnected with the systems of all neighboring countries. Georgia’s power system mainly operates in a synchronous regime with the systems of the Russian Federation and Azerbaijan. In addition, the Georgian power system operates in a parallel asynchronous regime with the system of Turkey. The dispatch licensee is responsible for the management of parallel operation of the power systems and for this purpose executes the necessary agreements with the neighboring systems. Georgia is actively providing transit services for the neighboring systems.