Uncompetitive price makes electricity traders carefully enter the second stage of electricity market liberalization

Although the first phase of electricity market liberalization in Serbia affecting high-voltage consumers started in 2013, it seems that our market is still not a representative example for a free one. The second phase of the opening of electricity market to medium-voltage consumers began 1 January 2014, but big electricity dealers in our country are not interested in participating in sales right now.

As people at EFT Trade told eKapija, their business plan for 2014 does not comprise participation in the retail electricity market for low and mid voltage consumers in Serbia. The company is though interested to supply these customers with electricity in the upcoming period but when adequate requirements are met.

Electricity suppliers point out that electricity price is now not competitive because the Electric Power Industry of Serbia which has had a monopoly so far is implementing social policy i.e. provides price lower than the market one so market opening for buyers implies higher electricity price.

The Axpo company, which deals with electricity in Europe and has a branch office in Serbia, says that they have not even tried to provide an offer to mid-voltage consumers because they cannot offer a competitive price.

- Our offers can be based on electricity import, we cannot buy from local producers so we cannot control price as EPS - Veljko Cvijic, director of Axpo, says for eKapija.

One of the biggest regional electricity dealers, Rudnap Group, decided to consider all aspects of the second stage of the electricity market liberalization in Serbia.

- It is essential that the entire process goes through certain stages so that we could speak about specific forecast and at this moment our expectations are pretty reasonable. The first element in the process is the fact that electricity both in Serbia and other countries, before market liberalization, was means of social peace purchase and that is the reason why the price with which market opening started was lower than the real one. Therefore, we have not been thinking when it comes to supplying of mid-voltage consumers so that we would implement all procedures and techniques which are new at our market gradually in our business–Sanja Bozinovska, Electricity trading department Manager at Rudnap Group said for eKapija.

The company estimates that the moment will come when the electricity price “will become a reflection of the realistic image in the region, i.e. of the market.”

According to data of the Agency for Energy in Serbia, some 70 electricity suppliers have been licensed, 30 of which is active. The representatives of the Electric Power Industry of Serbia told us that EPS Snabdevanje kept 79% of the mid-voltage market.

Last year, when the high transfer market was opened, the Electric Power Industry of Serbia lost one buyer which was taken over by GEN-I.

At Balkanmagazin's conference "Waiting for the electricity market”, held in mid February, Srdjan Resavac, a representative of the Slovenian company said that they kept that high voltage buyer in 2014 as well and that they acquired 2,5% market share with mid and low-voltage customers as well as that they signed contracts on delivery of 200 million KWh electricity.

Mid-voltage consumers

All mid-voltage companies, i.e. companies with more than 50 employees or an annual profit higher than EUR 10 mil or are either connected to the voltage higher than 1 Kv, should choose a supplier they will buy electricity from. Due to unprepared customers to take that step, some 3.200 of them, deadline has been extended until March 1 and after that until June 30.

As eKapija finds out at the Ministry of Energy, a total of 2.509 mid-voltage customers signed contracts with suppliers.

Although nobody submits offers even after the third tender release to some public companies which release a tender for procurement of electricity, the Ministry of Energy claims that “there are no indicators there will be extension of a deadline for supplier selection”.

Low level of information flow and tight deadline

Gornji Milanovac-based primary school, Kralj Aleksandar I, released a tender for electricity procurement for the third time.

- We received the task from the municipal administration to release a tender but nobody has answered it for the third release yet. We expect that EPS Snabdevanje will answer–Aco Mijailovic, a school secretary told us.

Apart from that, many schools do not even know why to release a tender at all. The grammar school, 20. oktobar from Backa Palanka, says everybody released a tender so they opted to take that step as well.

- We heard that in schools in our municipality no one submitted a proposal on a tender; I hope no one will answer us either since we are not informed about the entire situation at tall – representatives of Backa Palanka-based grammar school told us.

We turned to the Electric Power Industry of Serbia with the question whether EPS Snadbevanje will submit proposals for all tenders since taking into account that some public companies release a tender for the third time.

- EPS Snabdevanje answers all tenders published at the Portal of the Public procurement administration and answers all customers’ offers – EPS answered to eKapija.

It remains unclear how come that there is the same tender for the third time. We may find the answer in explanations of those who have released a tender for electricity procurement a couple of times and never got a single offer. The answer is:

- Electricity suppliers’ number at the open market and tight deadlines with respect to electricity market opening.

Small companies and households should prepare for the third stage of the electricity market liberalization with the difference that they will be able to keep public supplying, i.e. they will not have to choose electricity supplier.

Suzana Obradovic