State of compliance
The certification of the transmission system operator, Moldelectrica, is ongoing, in line with the Electricity Law that transposes the ownership unbundling requirements of Directive 2009/72/EC. Following the Government’s decision on the unbundling of Moldelectrica from generation and supply activities, adopted in August 2018, ANRE issued a preliminary certification. Due to issues related to the lack of ownership of the assets by Moldelectrica and the proposed control regime which would result in the same Ministry having control over the transmission system operator as well as other generation and supply companies, the Secretariat’s Opinion of 11 October 2019 concluded that the transmission system operator is not unbundled in line with the requirements of the Third Energy Package.
The electricity distribution companies RED Nord and RED Gas Natural Fenosa are both legally separated from supply activities. Both companies have adopted compliance programmes, notified them to the regulator and published them on the companies’ websites and appointed compliance officers. In June 2019, the privately-owned distribution company RED Union Fenosa was sold by Naturgy to a financial investor. The rebranding of the private distribution company is still to be done. Rules on monitoring the compliance programmes of the electricity (and gas) network operators to prevent discriminatory behaviour in their activities were approved by ANRE.
Requirements for accounting unbundling of regulated and non-regulated supply activities and per category of customers are transposed by the Law, but remain to be implemented in practice by all electricity suppliers. The unbundling of accounts also needs to be implemented by Energocom, who is active in both regulated and non-regulated activities, as the ‘central electricity supplier’- the single buyer of electricity from renewable sources from producers receiving support and a supplier in the wholesale and retail market.
Access to the system
Access to the system
The right to third party access has been transposed by the Electricity Law, however, implementation is lagging behind, most notably in relation to the access to interconnection capacities for cross-border trade. In December 2017, a revised methodology for calculation and approval of the transmission tariff was adopted by ANRE. However, no review of the transmission tariff was made and the value of the transmission tariff approved by the regulator in 2015 is still in force against an increased regulatory asset base and reduced return on assets compared with the previous year.
The methodology for calculation and approval of tariffs for access to the distribution networks was revised and adopted in February 2018. The methodology is enforced for the new regulatory period until March 2022.
The provisions on direct lines are transposed by the Electricity Law. In November 2018 and in May 2019, ANRE approved the methodology for the tariff calculation of the closed distribution system and the rules on the operation of closed distribution systems, respectively. According to these acts, the customers connected to the closed distribution system are not granted the right to be supplied by the supplier of their choice, as currently only the operator of the closed distribution system could supply the electricity customers connected to their grid. In practice, the regulator must make greater efforts to ensure eligibility for all customers and non-discrimination.
The existing rules for access to interconnection capacities adopted by ANRE in December 2016 transpose the principles of Regulation (EC) 714/2009 only partially.
During 2019, technical assistance for the implementation of an inter-transmission system operator compensation mechanism for inadvertent deviations was launched under the EU4Energy Governance project as well as activities on the implementation of joint capacity allocation of interconnections between the synchronous electricity systems of Moldova and Ukraine. As an outcome, compliance with Regulation (EC) 714/2009 related to the implementation of joint explicit capacity allocation on interconnections is expected to be ensured as of 1 April 2020.
Explicit auctions for access to the entire capacity on interconnections in direction of import to Moldova were held by the Ukrainian transmission system operator, Ukrenegro, during 2018. The revenues from capacity allocations are not split with Moldelectrica.
The Moldovan and Romanian systems are not synchronously connected and capacity is allocated jointly based on market procedures and performed by the Romanian system operator whenever a trading opportunity is identified.
The electricity wholesale market in Moldova suffers from lack of competition, which is mainly limited to imports from Ukraine and electricity generated at Cuciurgani-Moldavskaya GRES situated in Transnistria. The electricity producers in Moldova (mostly CHP generation and few renewables) are supplying under a regulated regime with priority and meeting only about 20% of electricity demand.
The wholesale market prices covering the remaining demand are deregulated. In January 2019, a new round of annual auctions for the procurement of electricity using a sort of implicit allocation of annual cross-border capacity to cover the annual demand of Moldova was held. The process was based on the improved procurement guidelines agreed in cooperation with the Secretariat. Energocom won the auction with a mixed portfolio of 85% electricity sourced from Cuciurgani-Moldavskaya GRES and 15% from DTEK (Ukraine). In 2019, technical assistance for support on rules and procedures including framework contracts for the procurement of electricity in Moldova was launched under the EU4Energy Governance project. The outcome is expected to streamline the process, improve transparency and create a level playing field in the Moldovan electricity market.
Energocom, an electricity supplier active in the market, was designated also as the single buyer of electricity from renewable sources. In April 2018, the company started operating as a counterparty for the renewable energy projects already commissioned. However, it has still to increase its administrative capacity and improve corporate governance in order to be able to fulfil these market roles.
The concept design for the operation of the wholesale electricity market and detailed wholesale electricity market rules, including rules for the forward market, the day-ahead and intraday markets, the balancing market, ancillary services procurement and imbalance settlement in Moldova were finalised in the framework of EU4Energy in 2018. However, the market rules are still pending adoption by ANRE.
The Electricity Law tasks the transmission system operator, Moldelectrica, with procuring balancing energy and system services, however, implementation is pending the adoption of the market rules. The current practice of buying electricity to cover the load profile of the entire Moldovan system, mostly through imports from Ukraine or from Cuciurgani-Moldavskaya GRES, is not compliant with the Law.
All customers with the exception of the customers connected to the closed distribution system are eligible to choose their supplier. In the retail market, there are two universal suppliers. Out of twenty suppliers licenced by the regulator, only three are active and supply at unregulated prices.
Universal suppliers are also designated as suppliers of last resort. ANRE regulates the universal suppliers’ end-user electricity prices per voltage level and all customers can remain supplied under regulated tariffs. The low level of competition in the wholesale market is affecting competition in the retail market. Competition is not likely to improve before Moldova couples its electricity market either with Ukraine or the European market through the interconnection with Romania.
The provisions of Directive 2009/72/EC on customer protection were transposed by the 2016 Electricity Law. However, there are no plans for the roll-out of smart meters in Moldova yet.
Vulnerable customers are also defined in the Electricity Law as a household customer that in compliance with social protection legislation is considered as vulnerable or a member of a vulnerable family. They are entitled to social protection measures that include financial assistance from the state budget for covering energy costs. The social assistance programme has been initiated a few years ago and is carried on year by year.
Regional integration of the electricity market of Moldova is lagging behind also due to the delay in Ukraine’s implementation of cross-border allocation rules in compliance with Regulation (EC) 714/2009. There is no regionally coordinated capacity calculation and allocation with Ukraine at present. Upon the finalisation of the technical assistance provided by the EU4Energy Governance project, the adoption of the new rules on allocation of cross-border capacities on the border with Ukraine, is expected by April 2020. The two transmission system operators have to strengthen their cooperation in order to implement the rules in compliance with Regulation (EC) 714/2009.
With the signature and ratification of the loan agreements, the Government of Moldova took important steps to advance the project on interconnection with the Romanian electricity system using back-to-back stations. A dedicated Project Implementation Unit has been created in the reporting period. The commissioning of the project is envisaged by the end of 2023. It is expected to contribute to the integration of Moldova with the European electricity market and thus improve competition and security of supply.
The Electricity Law requires the electricity suppliers to be legally registered in Moldova and provides no different conditions for trading activities only. The mutual recognition of licenses issued in another member of the Energy Community is not granted.
The transposition of Connection Network Codes is still pending, even though the deadline expired on 12 July 2018.