As part of the process of restructuring the energy market in Montenegro, the Regulatory Agency of Montenegro enacted at the very end of 2008 several regulations which, from the regulatory point of view, mean opening of the Montenegrin electricity market as of 1 January 2009. Concurrently, the Public Power Company of Montenegro (“EPCG”) acting as public provider of electricity enacted Electricity Market Rules. Below is the outline of most important changes introduced by these new regulations.

Decision on Opening of the Electricity Market

(Odluka o otvaranju tržišta električnom energijom, Sl. List Crne Gore, 01/09 od 09.01.2009.)

The most important is the decision on opening of the electricity market as of 1 January 2009. Electricity market consists of wholesale and retail market. Licenses for performance of particular activities (i.e. producers, suppliers, traders) on the wholesale market are issued by the Regulatory Agency. The electricity market is organized and run in accordance with Market Rules enacted by public provider of electricity. Participants of the wholesale market are and qualified buyers.

Decision on Determining the Public Provider of Electricity

(Odluka o određivanju javnog snabdjevača električnom energijom, Sl. List Crne Gore, 01/09 od 09.01.2009.)

As part of the opening of electricity market, the Regulatory Agency declared EPCG as the public provider of electricity. According to the decision, EPCG is obliged to continue with supplying all qualified buyers which were up to 31 December 2008 supplied as tariff buyers until they turn to other suppliers. EPCG is also entrusted to act as the supplier of last resort,

Decision on Qualified Purchasers of Electricity

(Odluka o kvalifikovanim kupcima električne energije, Sl. List Crne Gore, 01/09 od 09.01.2009.)

As of 1 January 2009 qualified purchasers are all entities except the households which are expected to become qualified purchasers as of 2015. Qualified purchasers have the right to pick their own supplier of electricity.

Rules on Establishment and Operation of the Electricity Market

(Pravila za osnivanje i rad tržišta električne enrgije, Sl. List Crne Gore, 01/09 od 09.01.2009.)

The Rules on Establishment and Operation of the Electricity Market determine the competitive and regulated market activities, the former comprising production of electricity for the market, supplying of qualified purchasers and electricity trading, whereas the latter encompasses production of electricity for tariff purchasers, transport of electricity, distribution of electricity, supplying of tariff purchasers, management of the power system and organization of the electricity market. Regulated market activities are performed under regulated prices and other conditions so as to secure availability, safety and quality of supply.

Wholesale electricity market is divided into long-term market (based on bilateral agreements), medium-term market (day ahead) short-term market (for balancing) and post-real time market (for solving any possible deviations).

Production of electricity is mainly intended for supply of tariff customers and only the excess of production above needs of tariff purchaser may be sold on the open market.

The Rules also determine the rights and obligations of qualified buyers and their suppliers, the content of the electricity supply agreement as well as the possibility to change supplier.

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