Analysis: Market Liberalization could decrease the Price of Electricity

September 5, 2017 4:30 PM

If Bosnia and Herzegovina (BiH) was to allow a liberalization of the electricity market, the price of electricity could be decreased, according to the Secretariat of the Energy Union in Vienna. According to their opinion, the free creation of prices in the market has shown itself to be better than bureaucratic management of prices.

“Even though many factors influence the price of electricity, a liberalization of the BiH market and establishing a connection with regional markets could bring about a decrease in the prices compared to the current ones, as previous examples have shown,” they emphasize. They also emphasized that it’s the responsibility of BiH to comply with the Third Energy Package and allow the large-scale sale of energy, as well as the small-scale sale, and to allow it to occur in a free market.

“In the RS, the price of electricity that companies create is still decided by regulators, which is against the TEP, which does not allow the full opening of the electricity market in BiH. And not just that: the signatories of the EC have committed themselves to allow access to foreign companies to their markets,” they noted. In the Regulatory Commission for Energetics in RS, they remind that all buyers of electricity in RS from January 1st, 2015 are allowed to choose their own supplier of energy. The network tariff is regulated, but the price of energy is not.

“The way to establish tariff positions and prices is regulated by the Rulebook on Tariff Methodology and Tariff Processes for Electricity and are confirmed by the tariff process which happens in the Regulatory Commission,” they note. They also note that the Regulatory Commission doesn’t establish tariff positions with supplying buyers with high and medium strength.

“When buyers are in question, they pay regulated tariff positions for using the distribution system, which is established by the Regulatory Commission. Namely, these buyers can purchase energy on the free market from our market suppliers where the prices are freely created or with the reserve supplier, in which case the price is created by the reserve supplier, according to regulations,” they note.




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