State of compliance
Since the alignment of Serbian legislation with the Third Energy Package in 2014, the organisation of AERS complies with the independence criteria stipulated by Directives 2009/72/EC and 2009/73/EC except that the management does not have full autonomy in designing the authority’s internal management which requires approval by Parliament. AERS is headed by a council consisting of a President and four members with a term of five to seven years, all renewable once. A rotation scheme is in place. AERS ensures accountability of its activities by presenting its annual report to the Parliament. The right to impose penalties is not with the regulator but is transferred to a competent court. While this is in line with Energy Community law, it weakens the ability of AERS to ensure enforcement effectively.
In praxis, regulatory independence is threatened by budgetary uncertainty and de facto lack of autonomy in setting staff salaries. According to the Law on the Maximal Number of Employees in the Public Sector, the employment of additional staff is subject to a decision of the National Assembly Committee for Administrative and Budgetary Affairs. The appointment of new employees is indirectly subject to parliament’s approval of the regulator’s annual budget.
The performance of AERS is beyond doubt when it comes to technical aspects of market regulation and tariff setting. AERS has proven both expertise and commitment to develop secondary legislation in line with domestic deadline. By contrast, AERS failed to enforce compliance of regulated companies with Serbian and Energy Community law in a number of core areas such as unbundling of the incumbents Srbijagas, Yugorosgaz (Case ECS 09/13S, Case ECS 10/17) and EMS. In the latter two cases, the issuance of a positive certification decision by the regulator despite the lack of the companies’ compliance with unbundling requirements is critical. Particular emphasis should be given to AERS’s long-standing active contributions to regulatory work on regional level via the Energy Community Regulatory Board.