Focus on Energy, 2010 - Karanovic & Nikolic

REGULATORY FRAMEWORKIntroduction – Energy LawThe regulatory framework of the Montenegrin energy sector will be defined by the Energy Law, which isdue to be adopted in March of this year. This will replace the previous energy law that had been in effectsince 2003. Even though at this point Montenegro does not have any infrastructure in the oil and gassector, the Energy Law will provide an elaborate set of rules that will regulate the storage and transportationof oil and gas, as well as rules governing the operation of the liquefied natural gas (”LNG”) facilitiesand the establishing of a regulatory framework to govern these energy activities once the relevantinfrastructure has been constructed.However, there are still further regulations be issued by the Government which should clarify the practicalimplementation of the various new solutions that are to be introduced by the Energy Law.Energy PricesThe Energy Law, (in accordance with the obligations that Montenegro assumed by signing the EnergyTreaty) sets out the agenda for the full liberalization of the energy prices by 2015. Currently the prices ofelectricity are either regulated or unregulated depending on whether the customer has the status of aqualified buyer of electricity or that of a tariff buyer.The tariff buyers buy electricity from the public supplier (the EPCG) under the tariff prices. A qualifiedbuyer may purchase electricity freely under the prices agreed with the supplier, but may elect to purchaseelectricity from the public supplier under the tariff prices as well. In principle all buyers of electricity,except for households have the status of a qualified buyer and may buy electricity independentlyunder the non-regulated prices. The tariff buyers buy electricity from the public supplier (the EPCG)under the tariff prices. A qualified buyer may elect to purchase electricity from the public supplier underthe tariff prices as well.The regulated prices of electricity are established by the producer of electricity in accordance with themethodology issued by the Agency and these prices must be approved by the Agency. In principle, theprice of electricity should be such as to cover the costs of production and include a margin on the investmentin the production of energy.The current system of energy prices will apply up to 2015, when at that point, the regulated prices shouldbe abolished, and all consumers, including the households, will obtain the status of the qualified buyersof energy.77FOCUS ON ENERGYRenewable EnergyNATIONAL STRATEGY FOR RENEWABLE ENERGY AND COGENERATIONThe Energy Law will introduce two strategy documents which should set out the national priorities in thedevelopment and promotion of the production of energy from renewable sources and cogeneration. Theseare the RES Program and the CHP Program; both are issued by the Government for a period of 10 years.The RES Program will set out the national goals for the utilization of RES, including, primarily, the minimumparticipation of the energy produced from RES in the overall final consumption of energy, includingelectric energy; heat/cooling energy and energy for transport (vehicles etc). The CHP Program should setout both the available and potential capacities for the development of high efficiency cogeneration, potentialbarriers for the development of these projects, incentives for development, the dynamics for theimplementation of cogeneration projects and the requisite financial resources required by an investor.The supervision over the implementation over the RES and the CHP Programs is to be assigned to theMinistry of Economy which will prepare a two-year report on implementation of the RES and CHP programsto the Government.