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Energy Regulatory Office of Kosovo Recent Regulatory Developments

Energy Regulatory Office of Kosovo Recent Regulatory Developments. Dr. Ali Hamiti Chairman of ERO. US-Kosovo Investment Forum 27 Oct 2010, New York. ERO Identity. Independent institution (art. 142 of the Constitution).

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Energy Regulatory Office of Kosovo Recent Regulatory Developments

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  1. Energy Regulatory Office of Kosovo Recent Regulatory Developments Dr. Ali Hamiti Chairman of ERO US-Kosovo Investment Forum 27 Oct 2010, New York

  2. ERO Identity • Independent institution (art. 142 of the Constitution). • Responsible for economic regulation of electricity, gas, and district heating sectors. • Established in 2004, by Law 2004/9. • 5 Board Members, full time, 5 year term. • Budgetary independence. • Chairman reports to Assembly. • ERO is member of the: - Energy Community Regulatory Board (ECRB), and - Energy Regulators Regional Association (ERRA). US-Kosovo Investment Forum 27 Oct 2010, New York

  3. ERO Organisation • Board of Commissioners (5) • Departments (4) • Energy supply and market structure • Consumer protection • Legal and licensing • Pricing and tariffs • Technical advisory group • Administration office US-Kosovo Investment Forum 27 Oct 2010, New York

  4. Mandate of ERO Objective “Set the Regulatory Framework for a Transparent and non discriminatory Energy Market based on free Market principles – promote competition” Tasks Ensure non-discriminatory access for all transmission and distribution network users at access prices reflecting true economic costs; Promote economic efficiency of energy use by providing short and long term true economic prices; Protect Customers while Ensuring Investors’ Interests; 4 US-Kosovo Investment Forum 27 Oct 2010, New York

  5. ERO Activities • Licensing of energy activities; • Granting of authorisation for new generation capacity; • Approval of tariffs and tariff methodologies for regulated activities; • Monitoring of unbundling and development of competition; • Adoption of secondary legislation; US-Kosovo Investment Forum 27 Oct 2010, New York

  6. ERO Activities (cont.) • Approve technical Codes for system operations • Resolve Disputes between Customers/Licensees, or between licensees; • Determine Standards of Service Quality of the Licensee; • Approve Procedures for Allocation of Interconnection Capacity; • Others such as: Issue “Certificates of Origin” for RES, Maintain a Public Register (Licenses, Eligible Customer, Certificates of Origin); 6 6 US-Kosovo Investment Forum 27 Oct 2010, New York

  7. Major recent ERO activities Preparation of draft rules on Certificates of Origin and eligibility for Feed-in-Tariffs for RES generation (currently under consultation). Issuing of Rule on Authorisations and Feed-in-Tariffs has already led to applications by 128MW of wind generation. Preparation of draft rules on customers obtaining eligible status. Right to eligibility extended to all non-household customers in August 2009. US-Kosovo Investment Forum 27 Oct 2010, New York

  8. Major recent ERO activities (cont.) • Drafted first versions of the: • Rule on Pricing for District Heating (DH) Sector; • DH Tariff Methodology. In process of finalization, and further process of public consultation and final approval by the Board of ERO. • Ongoing development of Regulatory Framework for cogeneration: • identification of instruments and the scheme for support of cogeneration; • modification of the draft Rule for support of RES-E; • pricing / Tariff Methodology for cogeneration. 8 US-Kosovo Investment Forum 27 Oct 2010, New York

  9. ERO after new Energy Laws (10/2010) Strengthening of ERO role in enforcing competition and avoiding its restriction or distortion. Strengthening of ERO role in monitoring security of supply and identifying failure of authorisation procedure. Opening electricity market for all customers by 1/1/2015. ERO approves electricity market design and market rules. Laws reflect market concept, decided by Government: bilateral contracts market with balancing market. Removal of cross subsidies and gradual rebalancing of tariffs by 12/2014. Laws provide clear specification of theft and related actions. US-Kosovo Investment Forum 27 Oct 2010, New York

  10. Kosovo Energy sector Generation operational capacities termo 927 MW hydro 43 MW wind 1.35 MW Line length transmission lines 1,142 km distribution lines 11,870 km Transformation capacities transmission 2,870 MVA distribution 2,571 MVA District heating concentrated in 4 cities covers 5% of demand No gas nor gas network in Kosovo 10 US-Kosovo Investment Forum 27 Oct 2010, New York

  11. Continuing improvements in electricity industry performance during 2009: consumption grew by 6.7%; generation from Kosovo sources grew by 6%; total distribution losses maintained at 42.8%; collection rates increased from 72% to 80%; SAIDI value of 95 hours and SAIFI value of 26.7. Major improvements in district heating industry performance: heating supplies to customers rose by 37%; collection rates increased from 38% to 61%; Ongoing project: Improvement of DH sector – Phase I: Rehabilitation of DH Systems of Prishtina, Gjakova and Mitrovica; phase II: Prishtina Cogeneration Project. Performance of regulated industries US-Kosovo Investment Forum 27 Oct 2010, New York

  12. KRPP and KEDS transactions Government of Kosovo is undertaking two major transactions during 2010-11. Establishment of new MineCo and GenCo as public private joint ventures to develop new lignite mine; build and operate Kosovo e Re Power Plant (560MW) – expected commissioning by 2016-17 rehabilitate existing Kosovo B power plant (600MW). Privatisation of retail supplier and distribution as Kosovo Electricity Distribution and Supply (KEDS). GenCo will have 20-year PPA with KEDS. US-Kosovo Investment Forum 27 Oct 2010, New York

  13. Tariffs issues Electricity Tariff Review 4: tariffs for 1 April 2010 – 31 March 2011. Licensees’ proposals represented an increase of 14% in average tariffs. Final approved tariffs unchanged from existing levels. correction of errors and claw back of capex not spent; adjustment of RAB valuation and disallowance of bad debts to conform to ERO’s published methodology; reduction of excessive import price assumptions Removal of all operating subsidies would have led to a 29% tariff increase in 2010. Appropriate tariffs policy crucial for implementation of scheduled large-scale investment in mining, generation and transmission and distribution networks. US-Kosovo Investment Forum 27 Oct 2010, New York

  14. Major challenges for ERO in 2010-11 Ensuring the regulatory framework facilitates the KRPP and KEK transactions, while continuing to protect customers, and meeting ERO’s legal duties. Accommodating the KRPP transaction with its long-term PPA, while ensuring compliance with new laws and Kosovo’s international obligations to open up its electricity markets to competition. Allowing recovery of justified and reasonable costs, while avoiding tariff shocks and excessive increases in tariffs. ERO Role in new market model design; US-Kosovo Investment Forum 27 Oct 2010, New York

  15. Thank you for your attention Dr. Ali Hamiti Chairman of the Board Energy Regulatory Office (ERO) 1 Hamdi Mramori Str. 10000 Prishtina, Kosovo Tel:    + 381 38 247 615 Fax:   + 381 38 247 620 E-mail: ali.hamiti@ero-ks.org Web:www.ero-ks.org US-Kosovo Investment Forum 27 Oct 2010, New York

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