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ANNUAL REPORT Power Sector Situation and ERE Activity for 2013

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ANNUAL REPORT Power Sector Situation and ERE Activity for 2013 REPUBLIC OF ALBANIA ENERGY REGULATOR AUTHORITY ____________________________________________________________________________________ ANNUAL REPORT Power Sector Situation And ERE Activity for 2013 The energy sector has the major role in the safe and sustainable development of a country. It directly affects the basic indicators of economic level and welfare . Energy potential as one of the greatest assets of a country should be used in the most efficient way possible to get the optimum product from them. This sector in our country is represented by power and natural gas sector . Trading and consumption of these products based on clear transparent rules represents the work objectives of the Energy Regulator Authority . The report we are presenting is a detailed information on the situation of the power sector, the level of services provided by public and private operators in the electricity market based on data that ERE administers within its authority, for regulating and monitoring the activities performed by licensed companies in the power sector. The activity of Energy Regulator activity during 2013 was mainly connected to the legal status of “CEZ Shperndarje” company. Also during this year was intensified more the regulator commitment in preparing and updating the regulatory legislating base of the natural gas market in our country. These have been two basic areas of regulator work related to the development of the electricity and gas market within the country and participation in their regional market. The developments in the electricity sector are followed by important steps and processes from its organization, management and administration view. ERE pursuant to the legal authority has done monitoring to the licensees and especially has monitored CEZ Shperndarje work for the activity that this company performs in electricity distribution sector as well as basic services for household and not household consumers. From these monitorings resulted many and different problems regarding the company performance and the quantity and quality services that it should have performed to the electricity consumers. There was noticed a deterioration of financial results of the company, significant reduction of the investment for strengthening the electricity distribution grid. In particular, was noticed a significant deterioration of one of the most important indicators of the company’s activity that is the indicator of electricity looses as it is the significant increase of non technical looses. The results of the company began to conflict with the predetermined requirements and conditions during the privatization process, and expressed the relevant documents on the basis of which was formalized this privatization. In these conditions performing its legal authority ERE after analyzing the situation in which CEZ Shperndarje ( Distribution System Operator and the Retail Public Supplier) was on January 21 2013 decided to remove the CEZ Shperndarje license from its distribution and retail public supplier activity. Based on this fact CEZ Shperndarje pursuant to Law No.9072, on 22.05.2003 "On Power Sector" as amended was set in temporary administration, a status that the company continues to have even today. In accordance with this status pursuant to Law No. 9072, on 22.05.2003 "On Power Sector" as amended, Article 18, ERE developed selection procedures for the Administrator of the company CEZ Shperndarje . Following this process ERE performed continuous monitoring of this company’s services focusing on the control of the solution for the key problems that led above all to the decision for removing the the licenses of the distribution and retail public supplier activity. Collective interruptions, high level of grid losses, low collections, lack of payments to public operators KESH, TSO and to traders , as well as the unjustified increase of the expenses to the detriment financial situation of CEZ Shperndarje company marked the main problems that ERE noticed in the monitorings performed at the company. During 2013 , as presented in details in this report, part of the problems found solutions concluding at the end of the year firstly avoiding the collective interruptions of electricity supply, brake the deterioration of the losses level, increasing the collections, elimination of third party services (where most disturbing was the collection of electricity purchased invoices through other companies) and above all during 2013 significantly improved the level of payments by CEZ Shpënrdarje for services offered by KESH, TSO companies and electricity traders. It should be noticed that failure to fulfil the financial obligations from CEZ Shperndarje sh.a, the obligations related to Wholesale Public Supply (KESH sh.a) and the Traders made that during 2012 the negative effects of CEZ Shperndarje company financial situation also effected even the small producers of electricity. On the other hand in relation to electricity Traders, the significant improvement of the payment level led to the reset of electricity from Traders that needed to cover the losses in the grid from CEZ Shperndarje company Also during 2013 the Energy Regulatory Authority continued its work towards the regulation of activities in the sector, consumer protection, further improvement of laws, handling new applications for licensing in the power sector activities etc. In the natural gas sector, during 2013 ERE realized procedures related to further development of the TAP pipeline based on cooperation and harmonization of procedures with regulatory authorities in the power sector in Italy and Greece. Attitudes and appropriate decision-making have reflected in any case the main purpose of \ ERE that is the implementation of the legislation as: Law No. 9072 dated 22.05.2003 "On Power Sector" as amended, Law no. 9946, dated 30.06.2008 "On the Natural Gas Sector” Law no..138/2013 Law "On Renewable Energy Sources” Model of Electricity Market approved by the Council of Ministers decision No. 338, dated 19.03.2008, as amended. Analysing the characteristics, developments and problems that the power and natural gas sector has showed in our country , strengthening ERE’s professional capacities is a major challenge of this institution in order to fulfill the obligations under the legislation in force and in particularly in the context of the Third Energy Package implementation adopted by the European Commission. This last mentioned becomes mandatory for implementation from January 1- 2015. Third Energy Package implementation requires a commitment of all policy making institutions in the country and of course a very strong commitment by the Electricity Regulator Authority which in this framework is required to implement this package through the adoption or improvement of a series of regulatory acts such as Market Rules, capacity Allocation Rules, Transmission Code, Distribution Code and tariff and electricity prices defining methodologies. In its reconstruction and developing process energy, gas and electricity sectors are before big and responsible challenges for the future of the country. Integrating political and economic processes, in which our country is passing can not be understood without a significant and sustainable development of the electricity infrastructure of the coutry. ERE Chairman Petrit Ahmeti Contents INTRODUCTION ................................................................................................................................................. 12 PART I ................................................................................................................................................................ 16 Chapter I ............................................................................................................................................................ 16 Electricity Market Regulation............................................................................................................................ 16 1. Electricity Market ...................................................................................................................................... 17 2. Electricity Generation ............................................................................................................................... 20 2.1 Capacity and Electricity Generation .......................................................................................................... 20 2.2 Criteria to Use the Hydropower reserve on the Drini River Cascade...................................................... 25 2.3 The situation in Vlora TPP ......................................................................................................................... 27 2.4 Generation from Private/Electricity Concession HPP-s ........................................................................... 27 2.5 Electricity Generation Efficiency .............................................................................................................. 32 3. Electricity Transmission................................................................................................................................. 34 3.1 Transmission System Operator ................................................................................................................... 34 3.1.1 Assets and Development of Transmission System .................................................................................. 34 3.1.2 TSO company activity ..............................................................................................................................
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