State of compliance
The Electricity Law transposes the unbundling requirements of Directive 2009/72/EC, allowing for the ownership unbundling model. According to the Law, the Government adopted the decision on the unbundling of Moldelectrica from generation and supply activities in August 2018. This enables Moldelectrica and ANRE to start the process of certification of the transmission system operator.
The three electricity distribution companies are all legally separated from supply activities. However, functional unbundling is still to be done. Rebranding, adoption of a compliance programme and appointment of compliance officers have not been completed for the two state-owned distribution companies. The third, privately owned distribution company has adopted a compliance programme, notified it to the regulator and published it on the company’s website and appointed a compliance officer. The rebranding of the private distribution company is still to be done. In December 2017, ANRE approved the rules on monitoring the compliance programmes of the electricity (and gas) network operators to prevent discriminatory behaviour in their activities.
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 the 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 related 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.
The methodology for calculation and approval of tariffs for the 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 practice, the regulator must make greater efforts to ensure non-discrimination and an objective approach in their implementation.
The existing rules for access to interconnection capacities adopted by ANRE in December 2016 transpose the principles from Regulation (EC) 714/2009 only partially. Following, technical assistance provided by the Secretariat under the EU4Energy project, ANRE is expected to adopt fully compliant rules on cross-border capacity allocation by the end of 2018.
No explicit auctions for access to the interconnections with Ukraine were held by Moldelectrica during 2018.
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 prices in the wholesale market covering the remaining demand are deregulated. In January 2018, a new round of annual auctions for the procurement of electricity using 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 70% electricity sourced from Cuciurgani-Moldavskaya GRES and 30% from DTEK (Ukraine). Despite a few open issues, the process was regarded as improved compared with the previous year, i.e. more transparent and rigorous.
Energocom, an electricity supplier active in the market, was designated also as the single buyer of electricity from renewable sources. The company has to increase its administrative capacity and improve corporate governance in order to be able to fulfil these roles in the market.
The concept design for the operation of the wholesale electricity market in Moldova was finalised in the framework of EU4Energy technical assistance and submitted to ANRE in March 2018. The proposed design is also addressing possibilities for market coupling with Ukraine, as the two electricity systems operate synchronously, or with Romania once the electricity infrastructure to interconnect the two systems with back-to-back substations will be finalised.
Furthermore, 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 June 2018. The draft rules were submitted to ANRE and the process of review by the regulator and the relevant stakeholders is expected to be finalised in October 2018.
Moldova is balancing its system mostly through imports from Ukraine or from Cuciurgani-Moldavskaya GRES. The Electricity Law tasks the transmission system operator Moldelectrica with procuring balancing energy and system services to keep the electricity system in balance. The current practice of buying electricity to cover the load profile of the entire Moldovan system is not in compliance with the electricity target model. The concept for the balancing market and the procurement of ancillary services is included in the draft electricity market rules. They should be promptly implemented upon their finalisation.
Related to transparency, ANRE adopted a Decision on transparency and publication of electricity market information transposing the requirements of Regulation (EU) 543/2013 in 2017. However, the Regulation has not been implemented in practice. Very limited data is published on Moldelectrica’s website and no data is submitted to the ENTSO-E platform as Moldova is currently only an observer to ENTSO-E.
All customers are eligible to choose their supplier. In the retail market, there are two universal suppliers. Out of twenty suppliers licenced by the regulator, only Energocom is active and is supplying 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. Only one eligible customer, a cement factory, has switched supplier and is supplied at unregulated prices by the state-owned Energocom. The lack 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 commissioning of which is expected by the end of 2021.
The 2016 Electricity Law transposed the concept of closed distribution systems in line with Directive 2009/72/EC, thus removing the non-compliant “sub customer” category, which existed under the previous Electricity Law. The provisions of Directive 2009/72/EC on customer protection were transposed by the 2016 Electricity Law.
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 adoption of the new rules on allocation of cross-border capacities on the border with Ukraine, expected by end 2018, 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 decisions made in July 2018 endorsing 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. The commissioning of the project is envisaged by the end of 2021. 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.
Transposition of Connection Network Codes is still pending, even though the deadline expired on 12 July 2018.