summary of the case
| status: | closed by Ministerial Council Decision / complied after Art.92 MC Decision |
| registered: | upon complaint 12.08.2008 |
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KOSTT was licensed in 2006 under legislation promulgated by Kosovo* to operate the transmission system within that Contracting Party. A set of bilateral agreements governing the relationship between KOSTT and EMS inter alia provides for mutual compensation for electricity transits for the purposes of the respective other party to and from third parties. With the application of multilateral Inter-TSO Compensation (ITC) Agreements in 2004, EMS ceased to compensate KOSTT for electricity transits. It does not forward to KOSTT the compensation received under the ITC Agreements. Furthermore, KOSTT does not receive the revenues from allocating transmission capacity on the interconnectors with the countries adjacent to Kosovo*. That allocation is made by EMS. The Secretariat assessed the situation for compliance with Energy Community law, in particular with Regulation (EC) 1228/2003 on conditions for access to the network for cross-border exchanges in electricity. That Regulation addresses both ITC compensation and interconnection capacity allocation. In the Secretariat’s preliminary assessment, the lack of compensation to KOSTT for costs incurred as a result of electricity transit on the network operated by it violates Article 3 of Regulation (EC) 1228/2003 in cases where the electricity flow originates or ends on EMS’ system.With regard to the revenues resulting from the allocation of interconnection on the interconnectors with countries adjacent to Kosovo*, the Secretariat, in the absence of any information on how EMS uses those revenues, assumes that they are not used for the benefits of either the availability of the allocated capacity, nor investments into the network operated by KOSTT, nor as an income taken into account to reduce the overall level of transmission tariffs on the network operated by KOSTT, as would be required by Article 6 of Regulation (EC) 1228/2003. Under this assumption, the Republic of Serbia fails to comply with Energy Community law in the view of the Secretariat. On 14 October 2016, the Ministerial Council decided the failure by the Republic of Serbia to comply with its obligation under Article 12 of the Treaty in conjunction with Article 6 (6) of Regulation (EC) 1228/2003 as congestion revenues were not used according to the said provision. With the adoption of Decision 2016/02/MC-EnC, the procedure under Article 91 of the Treaty in Case ECS-3/08 is closed. On 13 October 2017, the Secretariat initiated Case ECS-3/08S by submitting a Reasoned Request to the Ministerial Council under Article 92 of the Treaty. |
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procedural history
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17 September 2010: Opening Letter
Case
On 17 September 2010, the Energy Community Secretariat sent an Opening Letter to the Republic of Serbia in accordance with Article 12 of the Rules of Procedure for Dispute Settlement. The case was initiated by a complaint from the operator of the electricity transmission system located on the territory of Kosovo, KOSTT. In the Opening Letter, the Secretariat takes the preliminary view that the Republic of Serbia failed to fulfill its obligations under the Energy Community Treaty on account of practices by the state-owned Serbian transmission system operator Elektromreža Srbije (EMS) imputable to Serbia.
Procedure
With the Opening Letter, the Secretariat initiated a preliminary procedure, the purpose of which is giving the Republic of Serbia the possibility to react to the allegation of non-compliance with Energy Community law, and enabling the Secretariat to establish the full factual and legal background of the case. The Republic of Serbia has been given two months to comply of its own accord with the requirements of the Treaty, to justify its position. According to Articles 6 and 16 of the Rules of Procedure for Dispute Settlement, 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 2010.
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17 November 2010: response to the Opening Letter
In Case ECS-3/08, the Secretariat received a reply by the Republic of Serbia to the Opening Letter sent on 17 September 2010.
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7 October 2011: Reasoned Opinion
Steps taken
On 7 October 2011, the Energy Community Secretariat submitted a Reasoned Opinion in Case ECS-3/08 against Serbia. Having reviewed the reply of the Serbian government to the Opening Letter, the Secretariat maintains the findings made therein.
Procedure
With the present Reasoned Opinion, Serbia was requested to rectify the identified issues of non-compliance within a time limit of two months. At the same time, the Secretariat made clear that it is willing to discuss swift and practicable solutions with all parties involved, and invited the government to take the initiative in that respect.
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12 February 2014: Framework Agreement
A Framework Agreement governing the operational and commercial relations between EMS of Serbia and KOSTT of Kosovo* was signed by both companies’ general managers on 12 February 2014. The legally-binding Agreement constitutes a milestone in normalizing the relations between the two electricity system operators. It is to cover, amongst other things, issues related to congestion management, pan-European Inter-TSO Compensation (ITC), and the application of European standards for the operation of the transmission grid.
Based on its provisions, further arrangements will be made to ensure that KOSTT joins the European Network for Transmission System Operators for Electricity (ENTSO-E) as an independent control area, participates in the European-wide compensation mechanism among transmission system operators (ITC) and effectively allocates capacities on its interconnectors with neighbouring Contracting Parties of the Energy Community.
On 23 October 2014, high-level representatives of both system operators, ENTSO-E and the Energy Community Secretariat met in Brussels. The meeting marks the official beginning of negotiations between KOSTT and ENTSO-E about KOSTT’s future assumption of responsibilities stemming from the independent operation of a part of the synchronously connected transmission network.
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20 July 2016: Reasoned Request
On 20 July 2016 the Secretariat submitted a Reasoned Request to the Ministerial Council on Case ECS-03/08. IT thereby seeks seeking a decision from the Ministerial Council that by not using the revenues resulting from the allocation of interconnection capacity on the interconnectors with Albania, the former Yugoslav Republic of Macedonia and Montenegro for one or more of the purposes specified in Article 6(6) of Regulation 1228/2003, the Republic of Serbia, to which actions and non-actions of its state-owned transmission system operator are imputable, fails to comply with Article 6 of Regulation 1228/2003.
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14 October 2016: Ministerial Council Decision on failure
Steps taken
After having considered the Opinion by the Advisory Committee which upheld the Reasoned Request, and having regard to the reply from the country concerned, the 14th Ministerial Council took a decision on the failure by Serbia to comply with certain obligations under the Treaty. The Ministerial Council declared that by not using the revenues resulting from the allocation of interconnection capacity on the interconnectors with Albania, the former Yugoslav Republic of Macedonia and Montenegro for one or more of the purposes specified in Article 6(6) of Regulation 1228/2003, Republic of Serbia, to which actions and non-actions of its state-owned transmission system operator are imputable, fails to comply with Article 6 of Regulation 1228/2003.
In Article 2 of the Decision, the ministers urge Serbia to "take all appropriate measures to rectify the breaches identified in Article 1 and ensure compliance with Energy Community law, in cooperation with the Secretariat by December 2016".
Procedure
Serbia is asked to report to the Secretariat and the Permanent High Level Group about the measures taken. The ministers invited the Secretariat to initiate a procedure under Article 92 of the Treaty if the breaches are not rectified.