State of compliance
The transmission system operator, MEPSO, was certified by the regulator in line with the Third Energy Package unbundling requirements for ownership unbundling. The certification decision was adopted on 15 August 2019, following a positive Opinion 03/2019 of the Secretariat issued in June 2019. To unbundle the transmission system operator, the Government transferred its shares in the transmission system operator to the Ministry of Transport to separate control over it from the Government-owned generation company ELEM. MEPSO appointed its compliance officer and adopted a compliance programme, as required.
Unbundling of the distribution system operator was completed in line with the Energy Law that transposed the unbundling requirements correctly. Elektrodistribucija DOOEL, a subsidiary of EVN Makedonija, was established in 2016 and in the course of 2017 conducted the majority of the activities required for proper functional unbundling. During 2018, Elektrodistribution DOOEL performed rebranding and established a separate visual identity from the supply branch. The compliance programme was approved in November 2018, while the compliance officer was appointed in December 2018 and became operational. The first compliance report is being drafted and its submission to the regulator, ERC, is due in the course of 2019.
ELEM as a network operator that holds also generation and supply licenses is exempted from legal unbundling as it falls under the threshold of 100.000 connected customers. However, the company has not implemented accounting unbundling, which is in breach of Directive 2009/72/EC.
Access to the system
Access to the system
The right to network access is granted by the Energy Law, which transposed the Third Energy Package, including Regulation (EC) 714/2009 with respect to third party access provisions.
Access to the network is based on regulated network tariffs that are applied in a non-discriminatory manner.
The allocation of cross-border capacity is conducted in accordance with Auction Rules approved by the regulator. Regionally coordinated auctions are done through SEE CAO for interconnection capacities on the borders with Greece, whereas bilaterally coordinated joint auctions are applied on borders with Serbia and Bulgaria.
While the rules for refusal of access and construction of direct lines were transposed, the corresponding implementing acts must be revised. The Government failed to define the criteria and procedure for the construction of direct lines by the December 2018 deadline. The rules for the operation of a closed distribution system have been adopted by the regulator in 2019, as well as a new distribution network code.
The activities to establish a market operator as a separate legal entity, spun off of the system operator MEPSO, have been completed.
Regulation of the generation price is still present while the wholesale market is completely deregulated. The obligation of the incumbent generation company ELEM to provide electricity for supply to households and small customers under universal supply and supply of last resort was terminated as of 1 January 2019. An obligation of ELEM to offer a certain share of its production at market prices to the universal supplier as of 2019 is defined by the new Energy Law. A step-wise reduction of this share, starting from 80% in 2019 to a minimum of 30% in 2025 was defined.
The new Law introduced competitive purchases for all public service providers. The Law allows ERC to introduce measures to improve liquidity, in cooperation with the competition authority.
The activities to establish a market operator as a separate legal entity, spun off the system operator MEPSO, have been completed. The Macedonian Electricity Market Operator (MEMO), established in October 2018, obtained the license and became operational on 1 October 2019. MEMO is in charge of the organization and administration of the bilateral electricity market and ensures its efficient functioning and development. It is also responsible for the imbalance calculation and settlement of the balancing responsible parties and balancing groups and administering the trading with and balancing of renewables producers.
The Government’s decree on operation of the organized market operator, including the necessary technical, staffing and financial conditions, is expected to be adopted in October 2019. It will be followed by the Government’s decision on the designation of an organized electricity market, which fully transposes an Energy Community Regulatory Board recommendation for the designation of a nominated electricity market operator in line with the CACM Regulation.
The selection of an efficient way to establish an organised day-ahead market was supported by a technical assistance project under the WB6 regional energy market connectivity programme.
The Law allows ERC to introduce measures to improve liquidity, in cooperation with the competition authority.
Legal obstacles to the transmission system operator to procure balancing services in a non-discriminatory and market-based manner were removed by the adoption of the new Energy Law. The new Law requires the transmission system operator to adopt new balancing rules, which were approved in June 2019 and effective from 1 July 2019. However, an exemption from balancing responsibility was granted to undertakings licensed to perform regulated activities for the period from January 2019 until 31 December 2019. The exemption applies to two state-owned power producers, network operators and the supplier selected to provide universal service and supply of last resort to final customers. This is discriminatory and a major barrier to cross-border balancing cooperation. Until the exemption expires, the incumbent producer ELEM shall continue to provide balancing services at regulated prices.
The Law obliges market participants to submit the necessary data to the system operator, as well as the system operator to submit information to ENTSO-E. The deadline for adoption of the rules on providing information by market participants to the system operator and the rules for coordination and information exchange mechanisms and congestion management is 5 December 2019.
Until the provisions of the Law are implemented, the functioning of the wholesale market will remain non-compliant with the acquis.
The retail market is fully liberalized as of 1 July 2019, following adoption of the necessary implementing acts of the new Energy Law that grant the eligibility right to all customers, repealing the possibility to deny any customer the right to choose their supplier.
Switching rules as part of the Rules for the Supply of Electricity were revised in order to comply with requirements of the new Energy Law. In addition, the regulator approved the general terms and conditions of the contract for universal supply.
The Government conducted the tender procedure for the selection of a universal supplier and a supplier of last resort. The Law requires the selected supplier to establish a new legal entity to perform these tasks. The successful bidder, EVN Makedonija Elektrosnabduvanje Skoplje, set up a new company, EVN HOME, and obtained the corresponding licence. The regulator adopted revised rules for the procurement of electricity by the universal supplier in June 2019.
According to the new Law, the regulator adopts a tariff system for the sale of electricity by the universal service supplier and the supplier of last resort, as well as rules for protection of customers. A novelty of the new supply rules is a platform for retail prices, to be set up by the regulator, with the obligation of all retail suppliers exceeding 1% of the market share to publish the offered price on the platform.
In accordance with the supply rules, the retail suppliers are obliged to draft and submit to the regulator the form and content of a reminder for customers of their rights and obligations. Following the submitted applications, so far the regulator approved the form and content of the reminder for the universal supplier EVN HOME and the retail supplier EVN Snabduvanje.
A customer protection scheme, as defined by Annex I of Directive 2009/72/EC, had to be developed by January 2019, including the revision of the measures for protection of vulnerable customers adopted in 2013. The Ministry of Economy drafted the programme for protection of vulnerable customers in 2019. Following the Secretariat’s review of July 2019, there was no further activity and adoption is still pending.
The transmission system operator is procuring services of a regional auction office (SEE CAO), for the border with Greece, and of a regional security coordinator as part of the Security Coordination Centre (SCC).
A project for market coupling between Bulgaria and North Macedonia is ongoing. A roadmap was adopted in November 2018 and a cost sharing agreement was drafted and is expected to be signed once the day-ahead market operator is designated in North Macedonia.. The process is supported by a Memorandum of Understanding on electricity day-ahead market coupling between transmission system operators, national regulatory authorities and the power exchanges of Bulgaria and North Macedonia signed on 12 April 2018, envisaging market coupling based on available transmission capacity and in compliance with requirements of multi-regional coupling (MRC) and a Memorandum of Understanding at ministerial level.
The transmission system operator is taking part in the development of imbalance netting with the transmission system operators of Montenegro and Serbia, but it still has not started to participate in the process actively.
The Law introduced the possibility for a supplier established in a Contracting Party or Party to the Energy Community Treaty to operate in the national market under the principle of reciprocity and in cooperation with the respective national authority where the supplier is established.