As of 2014, 5000 companies more to choose their electricity supplier

Although as of the beginning of this year, the high voltage electricity consumers must buy electricity directly at the market, Messer Technogas is the only one which opted to change the supplier. The remaining 26 buyers, who do not have the right to public supplying, contracted with the Electric Power Industry of Serbia (EPS).

- The contracts EPS signed with 26 high-voltage consumers are at the open market since EPS participates at that market as well. All consumers which according to the Law on Energy do not have the right to public supplying,apart from Messer, as of January 2013 signed contracts on the overall supplying with the Electric Power Industry of Serbia – EPS confirmed for eKapija.

January 31, EPS increased electricity price for almost 70% for high voltage consumers only a month after market liberalization for that category. Due to electricity price increase, Messer with a 5% stake in total consumption of al open market consumers, contracted with Slovenian GEN-I.

- Pricing shock brought Serbia 30% electricity price increase than Germany although it has up till that moment always had competitive prices. It is drastically negative effect on Serbia as an industrial location. We have not been ready for such a drastic price boost. In Serbia, none of the companies has had experience with anu other company which operates in electricity sales field except from EPS, nor we had experience how foreign electricity markets function. Due to more favorable price, we were the first in Serbia which chose another supplier instead of EPS and contracted on electricity supplying with GEN-I – Ernst Bode, director of Messer Tehnogas, said for eKapija.

(Photo: Jelena Đelić)

Our collocutor points out they are very pleased because of the right decision and that they have good cooperation with the Slovenian company.

- Although electricity costs are still higher than in Germany, although we are paying 50% more for the electricity than before, compared with EPS offer, supplying from GEN-I generated significant savings –Bode mentions.

The Agency for Energy licensed 63 suppliers, 27 of which are active. We were interested in private companies why, despite electricity price increase, they opted to continue purchasing electricity from EPS and not from some of 27 suppliers.

We did not manage to get answers from Titan Cementara, Holcim, Lafarge and Sirmium Steel as well as from Fiat automobili Srbija.

When eKapija asked why NIS ad Oil Refinery Pancevo decided to contract with EPS since EPS increased electricity price early this year, NIS said:

- The contract with EPS was signed in line with the open tender results, electricity market situation after its partial liberalization in line with the valid laws of the Republic of Serbia as well as based on the fact that the company offered NIS the best electricity delivery terms.

The company says that in the upcoming period they could consider an option of contracting with another supplier and as conditions they state -competitive commercial terms with guaranteed constant and regular deliveries of essential electricity deliveries for undisturbed operations of NIS.

Although as of the beginning of the year, 10% of electricity market has been formally opened, Aleksandar Macura, an independent consultant for energy thinks electricity free market does not exist today.

-It is all in the hands of the state and I am not speaking about EPS privatization but about the fact whether the government wants a normal company which will generate profit while the Government will run the politics. Everything is possible in this situation. Free market is not in fact free because EPS is not a company. EPS can still move its business costs to other parties and EPS is not managed with clear business objectives. EPS does not even own “its”property. On the other hand, many business activities in Serbia exist only because the electricity price was the way it was so we may see serious changes when it comes to demand as well. Many consumers which are obliged to contract are not able to pay for the electricity and companies which went the restructuring process had legal right to do so – our collocutor mentions.

Tender for reserve supplier by the end of2013

Large industrial consumers which by January 1 did not contract on time with some of the suppliers at the domestic market, they had the right to supply from the reserve supplier within 60 days. The Serbian Government decided EPS will be a temporary supplier.

As we found out in that company, none of the high voltage consumers, i.e. transmission system consumers, was not on reserve but on complete supplying.

The Ministry of Energy said for eKapija that tender for reserve supplier should be released after the amendments of the Law on Energy and by the end of the year latest.

Thesecond strike of electricity market liberalization

In the second stage of the electricity market opening should follow in January 1, 2014, between 4.000 and 5.000 companies should enter. According to the Ministry of Energy, only households and small electricity consumers(legal entities and entrepreneurs with less than 50 staff and an overall annual profit of up to EUR 10 mil) will remain in the system of public supplying while mid voltage consumers as well as a part of low-voltage consumers will contract supplying at the market.

- Total consumption of these consumers totaled 5, 5 TWh last year. Among other things, this group of customers contains both small and medium-sized enterprises which are the healthiest part of the Serbian economy – the Ministry of Energy says.

The first man in Messer Tehnogas, says he is not ensured that January 1, 2014 will see the second stage of the market liberalization for mid-voltage electricity consumers.

- It might take a bit longer although EPS with its 30.000 staff should have administrative capacities to prepare the market and signs all contracts.

Bode expects that in the future, the offered price and supplying flexibility will definitely be a determining factor in the selection of the electricity supplier.

- Sellers should relate electricity prices with the European markets prices so that the end user price depends on trends at these markets. EPS is after all electricity producer and can adjust its price in a more convenient way if it wants but it should try to be more competitive than any electricity seller and it should be convinced that it is more important to support Serbian industry than export cheap electricity.

Macura also confirms that electricity price for the upcoming period is not easy to establish since in the short run, “everything can change with the governmental decisions”.

- We will be able to provide more serious forecast only when we clearly see what the government is planning with EPS. In Croatia, HEP started to lose customers although prices in a battle are a bit higher. An overview of electricity prices at markets in the region can also help us to realize that,if there are conditions for set up of the free market, only well-managed EPS will be able to be regionally competitive and that it operates by the rules which are effective for the European electricity market which is an obligation taken over from the Energy Community Contract.

As of January 1, 2015, after opening of the electricity market for the companies, households should also be enabled to freely choose market supplier with an option to keep public supplying.

Suzana Obradovic