State of compliance
After the adoption of a new Energy Law transposing the Third Energy Package in 2015, the Energy Regulatory Authority of Montenegro (RAE) ranks among those regulators whose organisation complies with all independence criteria and competences stipulated by Directives 2009/72/EC and 2009/73/EC with the exception of two shortcomings.
- The management is not entirely free to decide on the authority’s internal organisation as its statutes are subject to governmental approval.
- The possible penalty levels are significantly below the required 10% threshold, which represents a breach of the acquis. In addition, the right to impose penalties is not with the regulator but is transferred to a competent court. Whilst in line with Energy Community law, it weakens the ability of RAE to ensure enforcement effectively.
RAE is headed by a Board consisting of two members and a President and, in addition, has an executive director and a deputy executive director. The term of the President and Board members is limited to a period of five years, renewable once and a rotation scheme is in place. RAE is held accountable for its activities by being obliged to annually present a financial report as well as a report on the situation in the energy sector of Montenegro to Parliament.
Following the entry into force of the new Energy Law, the regulator has demonstrated its ability to exploit its new competences and level of legal independence. In the electricity sector, RAE developed an advanced market model with a high degree of market orientation and proved being a proactive promoter as regards the implementation of national and regional reforms envisaged under the Western Balkan 6 process. Despite the lack of a gas market in Montenegro, the agency with the support of a consultant, also started developing secondary legislation for gas. The regulator further demonstrated commitment to defend its secondary legislation in front of national courts and proved expertise in proposing legislative changes able to address the court’s concerns.
Effective functioning and independence of RAE are, however, challenged by several staff salary cuts in a row. The cuts are a direct result of a shortage in the state budget and RAE’s staff being made subject to salary rules applicable to civil servants even though the regulator is not financed from the state budget. This weakens the ability of the regulator to attract qualified staff and risks brain drain. Cooperation with the Secretariat is well established. On regional level, RAE participates actively in ECRB.