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Annual Report 2019 ANNUAL REPORT 2019 Prishtina, March 2020 Address: Str. Dervish Rozhaja No. 12, 10000 Prishtina, Kosovo Tel: 038 247 615 ext. 101, Fax: 038 247 620, E-mail: info@ero-ks.org, web: www.ero-ks.org ANNUAL REPORT 2019 TABLE OF CONTENTS 1 EXECUTIVE SUMMARY ............................................................................................ 6 2 ENERGY REGULATORY OFFICE ................................................................................ 9 2.1 The Board of the Regulator........................................................................................ 9 2.2 Organizational Structure and Human Resources .................................................... 10 2.3 Funding of the Regulator ......................................................................................... 14 3 ACTIVITIES OF THE ENERGY REGULATORY OFFICE ................................................ 15 3.1 Licensing of energy activities ................................................................................... 15 3.2 Renewable Energy Sources (RES)............................................................................. 18 3.3 Authorization - construction of new capacities ....................................................... 22 3.4 Self-consumption generators .................................................................................. 28 3.5 Harmonization of Power Purchase Agreements by the RES ................................... 29 3.6 Monitoring of energy enterprises ............................................................................ 30 3.7 Court Disputes ......................................................................................................... 36 3.8 Electricity and Thermal Energy Annual Balance ...................................................... 36 3.9 Activities of the Regulator in the Area of Price Regulation ..................................... 37 3.10 Activities of the Regulator in the Area of Customer Protection .............................. 46 3.11 TSO (KOSTT) Certification Process ........................................................................... 51 4 COOPERATION WITH OTHER PARTIES AND TRANSPARENCY ................................ 52 4.1 Reporting and cooperation with the Assembly of Kosovo ...................................... 53 4.2 Cooperation with International Organizations ........................................................ 55 4.3 Procurement activities ............................................................................................. 64 5 FINANCIAL REPORT OF ERO .................................................................................. 65 5.1 Revenues .................................................................................................................. 65 5.2 Budget ...................................................................................................................... 65 5.3 Budget Expenditures ................................................................................................ 66 6 ELECTRICITY SECTOR ............................................................................................. 70 6.1 Characteristics of the electricity sector ................................................................... 70 6.2 Primary Energy Sources ........................................................................................... 74 6.3 Electricity Generation .............................................................................................. 75 6.4 Transmission System................................................................................................ 80 6.5 Electricity distribution system ................................................................................. 90 6.6 Electricity Supply ...................................................................................................... 99 6.7 Electricity Import and Export ................................................................................. 104 2 ANNUAL REPORT 2019 6.8 Quality Standards of electricity supply and services .. 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Bookmark not defined. 7 THERMAL ENERGY SECTOR ................................................................................. 121 7.2 Main Developments in Thermal Energy Sector ..................................................... 122 7.3 Performance of District Heating Companies ......................................................... 125 7.4 Overall production, supply and losses of thermal energy ..................................... 129 7.5 Billing, collection and heating surface ................................................................... 129 8 NATURAL GAS SECTOR ........................................................................................ 132 8.1 Perspective of the development of natural gas sector in Kosovo ......................... 132 9 CONCLUSION ....................................................................................................... 135 9.1 Challenges/Recommendations of the Regulator ................................................... 135 3 ANNUAL REPORT 2019 List of abbreviations CPA Central Procurement Agency EU European Union RES Renewable Energy Sources CCP Customer Care Programme CEER Council of European Energy Regulators TENGD Thermal Energy and Natural Gas Department LLD Legal and Licensing Department CPD Customer Protection Department TPD Tariffs and Pricing Department EMD Energy Market Department EBRD European Bank for Reconstruction and Development EC European Commission ECRB Energy Community Regulatory Board SEE South East Europe EMS Serbia Transmission System Operation ENS Energy Not Supplied ENTSO-E European Network of Transmission System Operators for Electricity ERC Energy and Water Regulatory Commission of the Republic of Northern Macedonia ERE Albanian Energy Regulator Authority ERRA Energy Regulators Regional Association USS Universal Service Supplier GWG Gas Working Group PHLG Permanent High Level Group GWh Gig watt hour HC Hydropower Plant MAR Maximum Allowed Revenue IAP Ion-Adriatic-Pipeline ITC Inter TSO Compensation EnC Energy Community KEDS Kosovo Electricity Distribution and Services SEEEC South East Europe Energy Community KEK Kosovo Electricity Corporation KESCO Kosovo Electricity Supply Company KESH Albanian Energy Corporation KfW German Development Bank CM Council of Ministers km Kilometer KOSTT Transmission, System and Market Operators KPSC Kentucky Public Service Commission kV Kilovolt kW Kilowatt OL Overhead line MPA Ministry of Public Administration 4 ANNUAL REPORT 2019 PPA Power Purchase Agreement MESP Ministry of Environment and Spatial Planning MVA Megavoltamper MW Megawatt MWh Megawatt hour MWTH Thermal Megawatt MED Ministry of Economic Development NARUC National Association of Regulatory Utility Commissioners AU Administration unit DH District Heating SS Substation DSO Distribution System Operator TSO Transmission System Operator MO Market Operator PECI Projects of Energy Community Interest EP Regulatory Period RAB Regulated Asset Base RoR Rate of Return SAIDI System Average Interruption Duration Index SAIFI System Average Interruption Frequency Index SCADA Supervisory Control and Data Acquisition SKE Energy Community Secretariat TAP Trans-Adriatic-Pipeline PP Power Plant TF Task Force TKE Energy Community Treaty MV Medium Voltage TR Transformer LV Low Voltage VAT Value Added Tax AI Administrative Instruction USAID United States Agency for International Development WACC Weighted Average Cost of Capital WBIF Western Balkans Investment Framework CA Cadastral Area ERO Energy Regulatory Office (ERO) 5 ANNUAL REPORT 2019 1 EXECUTIVE SUMMARY Pursuant to the obligations contained in the Law No. 05/L-084 on the Energy Regulator, the Energy Regulatory Office (hereinafter ERO) presents the Annual Report 2019 for review by the Assembly of the Republic of Kosovo. The Annual Report contains information on activities undertaken and results achieved in relation to the scope of ERO, as well as analysis regarding the energy enterprise activities, according to licensee data, and present an overview of the energy market development in Kosovo. An integral part of this report is also ERO's financial report for 2019. The Regulator drafted secondary legislation for the energy sector, based on the requirements arising from the primary laws and the obligations deriving from the Energy Community, where Kosovo is a participant in the Energy Community Treaty. The drafting and review of the secondary legislation by the Regulator is done by applying public consultations where third parties can provide their stands. Further, a brief summary of the Regulator's activities and developments in the energy sector is presented, starting with the obligations, responsibilities, organizational structure and funding of the Regulator. An important activity of the Regulator is the licensing of energy enterprises for generation, supply/trade, transmission and distribution of energy. The Regulator’s Board has issued licenses for energy generation to the companies; Hydroenergy, Kelkos Energy, Kosovo Energy Corporation (KEK for the TPP Kosova A - license extension) and in the process of review is the application of Contour Global Kosova. The license for the company Enerco LLC has been issued for the supply of electricity. The Regulator, through various forms of support, including the Support Scheme and priority in dispatching, pays special attention to the development of Renewable Energy Sources (RES) projects. The projects for the development
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