summary of the case
| status: | closed in preliminary procedure (Art.91) / complied in preliminary procedure |
|---|---|
| registered: | upon complaint 03.07.2008 |
Case ECS-2/08 has been initiated upon a complaint. The two aspects of the amendments to the Energy Law from 2008 challenged by the complaint were:
- the position of the state-owned generation company on the regulated wholesale market for electricity, and,
- the exclusion of the distribution system operator from electricity supply by the generation company when it comes to electricity needed to cover commercial losses.
According to the Secretariat’s initial assessment, bringing these amendments in compliance with the Energy Community Treaty’s rules on free movement of electricity and competition would require further legislative or administrative action.
The Secretariat was of the view that North Macedonia has failed to open its wholesale electricity market in line with the requirements of the Directive and that it has arranged the position and structure of the state-owned electricity generator ELEM in a way discriminating against non-domestic electricity and foreclosing the regulated market to the detriment of consumers. Furthermore, the regulated distribution tariffs failed to take into account costs incurred for purchasing electricity necessary to cover losses and thus breaches the principle of cost-reflectivity.
Following the adoption of a new Law on Energy in February 2011 by North Macedonia, and the signature of an Implementation Partnership for secondary legislation in April 2011, the Secretariat decided to close Cases ECS-2/08, 4/08 and 1/09.
procedural history
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24 September 2008: Opening Letter
Case
On 17 September 2008 the Secretariat sent an Opening Letter to North Macedonia in accordance with Article 12 of the Rules of Procedure for Dispute Settlement under the Treaty. Acting upon a complaint by a private body in accordance with Article 90 of the Treaty, the Secretariat takes the preliminary view that compliance of the recent amendments to the Law on Energy in North Macedonia with the obligations derived from the Energy Community Treaty is in doubt.
Procedure
The Opening Letter sent initiated a preliminary procedure, the purpose of which is giving North Macedonia the possibility to react to the allegation of non-compliance with Energy Community law, and enabling the Secretariat to establish the factual and legal background of the case.
According to Articles 6 and 16 of the Rules of Procedure for Dispute Settlement under the Treaty, interested parties may be granted access to the case file and may submit written observations on the present case to the Secretariat within one month from 17 September 2008.
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17 July 2009: Reasoned Opinion
Steps taken
On 17 July 2009, the Energy Community Secretariat submitted a Reasoned Opinion in Case ECS-2/08 against North Macedonia. The case concerns several aspects of the Energy Law as amended in 2008 with a bearing on the structure of the wholesale electricity market and the methodology for calculating regulated distribution tariffs.
Procedure
With the present Reasoned Opinion, North Macedonia has two months to bring its laws and regulation in compliance with Energy Community law. ln the light of the reply or absence of a reply, the Secretariat shall bring the matter to the attention of the Ministerial Council for decision.
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13 October 2009: Response on Reasoned Opinion
Steps taken
Early October 2009, the Energy Community Secretariat received an official reply by the Government to its Reasoned Opinion of 17 July 2009. After having analysed the reply, the Secretariat issued a press release on 13 October 2009 stating that its concerns expressed in the Reasoned Opinion have not been dispelled.
Reasoning
The Secretariat remains convinced that the Law on Energy as well as the Rulebook on the Method and Conditions for Electricity Price Regulation need to be amended as a precondition for achieving full compliance with North Macedonia’s obligations under the Energy Community Treaty.
Under these circumstances, the Secretariat must consider taking further procedural steps. In this respect, a swift initiation of the reform projects envisaged by the Government in its recently adopted Action Plan will be crucial. This Action Plan what includes the Government’s announcement to make amendments to the Law on Energy and the clarification that the Energy Regulatory Commission (ERC) may amend the relevant secondary legislation.
With regard to the first aspect of Case ECS-2/08, the lack of opening of the wholesale market and the position of the state-owned electricity company ELEM in charge of supplying electricity to and importing electricity on behalf of the regulated market, the Secretariat takes notice of the Government’s pledge to “upgrade the model of the electricity market”, to ensure “fair treatment of all participants on the market”, to clarify “the responsibilities of the regulated companies in the energy sector” and to provide “conditions for full electricity and natural gas market liberalization.” Given the very concrete account of instances of non-compliance with Energy Community law made in the Reasoned Opinion, these general declarations need now to be followed up by concrete changes to the Law.
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4 February 2011: new Energy Law
The Parliament of North Macedonia passed the country’s new Energy Law on 3 February 2011. The Law sets the general legal framework for the domestic energy sectors including electricity, gas, renewable energy, energy efficiency, oil and security of supply. The Energy Community Secretariat had requested a new law in compliance with EU legislation in the context of a dispute settlement procedure, and then assisted the Ministry with drafting.
After the adoption of the new Energy Law, a bundle of secondary legislation had to be adopted and enforced to implement the law. In order to master the challenge, the Secretariat, Ministry of Economy and the Energy Regulatory Commission agreed on the establishment of an implementation partnership in April 2011.
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3 May 2011: closing of the case
Following the adoption of a new Law on Energy in February 2011 by North Macedonia, and the signature of an Implementation Partnership for secondary legislation in April 2011, the Secretariat decided to close cases ECS-2/08, 4/08 and 1/09.