State of compliance
On 4 August 2017, the national regulatory authority AERS certified the transmission system operator EMS as compliant with ownership unbundling rules of the Third Energy Package. In its Opinion 03/17 issued on 15 June 2017, the Secretariat concluded that EMS is not unbundled in line with the ownership unbundling model. As the Law on Ministries was changed with an objective to ensure separation of public bodies as a requirement for ownership unbundling after the Secretariat issued its Opinion, the Secretariat formally requested the regulator to reopen the certification procedure on 15 September 2017. Following the receipt of additional information from AERS on 7 May 2018, the Secretariat concluded that EMS is still not unbundled in a compliant manner because the changes in the legal framework concerned only tasks for preparing “proposals for acts on appointment and dismissal” while the final decision-making remains with the Government.
Although legal unbundling of distribution system operator EPS Distribution from supply has been finalized, functional unbundling has not been completed yet. Consequently, the issuance of the license for distribution system operation by AERS is still pending. In June 2016, the regulatory authority approved the compliance programme and appointment of the compliance officer. The first compliance report of 30 June 2017 concludes that independence of the company in terms of organisation and decision-making still does not exist and that the compliance programme is also not implemented. Rectifying this breach requires amendments to the founding act of the distribution system operator. Activities on aligning the statute of the distribution system operator with the Law on Public Enterprises and the Energy Law are ongoing.
Access to the system
Access to the system
Provisions on third party access to transmission and distribution systems are transposed in compliance with the Third Energy Package. Tariffs for access to the transmission and distribution systems are determined based on the methodologies adopted by AERS and are published.
The Energy Law transposes requirements for the construction of direct lines in a compliant manner. Detailed criteria for issuing an authorisation for the construction of direct lines are further defined in the Rulebook on energy permits.
EMS is still not allocating cross-border transmission capacities through the regional platform for coordinated capacity allocation SEE CAO. Allocation of capacities is performed through bilaterally agreed joint or split auctions, except capacities on the border with Croatia, which are, as of 2018, allocated through Joint Auction Office (JAO) in accordance with the harmonised allocation rules and the border specific annex for the Croatia-Serbia border.
In October 2017, the Secretariat initiated a case under Article 92 of the Treaty against Serbia, requiring the Ministerial Council to establish a serious and persistent breach of its obligations under the Treaty (Case ECS 03/08S). The breach concerns a failure to take measures to rectify the breach of Energy Community Law established by the Ministerial Council Decision 2016/02/MC-EnC for not using the revenues resulting from the allocation of interconnection capacity on the interconnectors with Albania, former Yugoslav Republic of Macedonia and Montenegro for one or more of the purposes specified in Article 6(6) of Regulation (EU) 714/2009.
The wholesale market is fully deregulated. In addition to bilateral trading, organised day-ahead trading is taking place in the Serbian power exchange SEEPEX, which is operational as of February 2016. Trading in SEEPEX is voluntary and the majority of participants are foreign companies which are allowed to trade in the Serbian wholesale market. In 2017, the trading volume on SEEPEX increased by 60%. No regulatory measures promoting liquidity have been taken yet. SEEPEX and the Hungarian Power Exchange HUPX initiated activities to merge their businesses, based on a Memorandum of Understanding signed in February 2018 together with the transmission system operators of Hungary and Serbia and the European Power Exchange EPEXSPOT. Further steps are subject to negotiations.
The national balancing market is operational and imbalance settlement is applied to all market participants in a non-discriminatory manner. Foreign companies can also participate in the balancing market. However, there is still no competition. The balancing services are provided by only one balancing service provider, the incumbent generation company EPS. In the ancillary services market, EPS provides balancing reserve at a regulated price (or at A regulated price). In addition, EMS is obliged to give preference to balancing service providers that are obliged to offer balancing services, namely to EPS. Development of competition will require phasing out the preferential procurement of balancing reserve and its price regulation. AERS has not yet published an annual report on the need for further regulation of the balancing reserve price.
Regulation (EU) 543/2013 on market data transparency is transposed by the Rules on Publication of Key Market Data. The publication of data and its submission to ENTSO-E are implemented through an electronic transparency platform operated by EMS. In order to ensure full compliance, amendments of the Energy Law and other relevant laws as regards the possibility to publish data on generation units, which are currently considered as commercially sensitive information, will be required.
All customers are eligible to choose a supplier of their choice. Prices of supply were deregulated as of 1 January 2015, except the price of electricity supplied to households and small customers entitled to universal service. The regulated price of guaranteed supply is still below a competitive and economically justifiable price, which does not provide sufficient incentive for customers to change their supplier. In practice, essentially all customers that are entitled to guaranteed supply are using this right and thus are still supplied by EPS.
AERS has not yet published an annual report on the need for further regulation of the price of electricity for guaranteed supply. In a 2017 report, the lack of competition was used as a justification to continue regulation of these prices and postpone further the selection of a guaranteed supplier and supplier of last resort in a competitive procedure. A right to supply of last resort was used by customers that failed to find an alternative supplier, most of which were customers financed from the state budget.
Protection of customers shall be detailed by the decree on delivery and supply and rules on quality of delivery and supply, both of which have still not been aligned with the Law. The decree on vulnerable energy customers defines detailed criteria for obtaining the status of vulnerable customer. However, in practice the number of customers that have used their right to the status of vulnerable customer is still far below the projected number of customers entitled to the status of vulnerable customer.
Negotiations between EMS and the regional auction platform SEE CAO have stalled. As a result, EMS is still not participating in a regionally coordinated capacity allocation, except for the border Croatia-Serbia, which is allocated through JAO.
EMS is a shareholder of the Security Coordination Centre (SCC), which was established together with the transmission system operators of Bosnia and Herzegovina NOS BiH and of Montenegro CGES. However, coordinated capacity calculation is still missing.
EMS and the transmission system operator of Kosovo* KOSTT failed to make progress in implementing contracts signed in 2014. Negotiations between Serbia and Kosovo* on this long-standing dispute are facilitated by the Energy Community Dispute Resolution and Negotiation Centre and supported by the technical assistance provided under the WB6 regional energy market connectivity programme.
There is still no progress made towards coupling the Serbian day-ahead market with the markets of Hungary, Czech Republic, Slovakia and Romania (known as 4MMC), for which SEEPEX, together with the Serbian regulatory authority and the transmission system operator, expressed interest in 2016. Serbia is participating in a project for coupling with Montenegro, Albania and Italy, however, no progress has been made yet.
EMS is exchanging balancing energy from a manually activated frequency restoration reserve on a bilateral basis with the transmission system operators of Montenegro and Bosnia and Herzegovina. Implementation of regional balancing cooperation, including imbalance netting in the first place, is still pending.
Transposition of Connection Network Codes is still pending, even though the deadline expired on 12 July 2018.
Foreign companies established in the EU Member States or the Energy Community Contracting Parties are not required to have a seat in Serbia in order to obtain a license for wholesale trade.