Ten countries form company to boost electricity distribution

An agreement may result in lower prices for consumers and dependable energy supplies and signals long-elusive market integration.

By Ivana Jovanovic for Southeast European Times in Belgrade -- 16/07/12

The joint distribution system should ensure stable supplies of electricity to all member countries. [Nada Bozic/SETimes]

Ten countries have signed an agreement to register a new company, the Co-ordinated Auction Office for Southeast Europe (SEE CAO), to distribute electric power throughout the region.

The company will be headquartered in Podgorica, its basic aim to ensure steady supplies of electricity to Albania, Croatia, Bosnia and Herzegovina (BiH), Macedonia, Greece, Montenegro, Romania, Slovenia, Kosovo and Turkey.

"For example, if Croatia wants to export electricity from Turkey, it must ask BiH, Montenegro, Bulgaria etc… to do it. This will not be the case anymore. Croatia will get it directly from anywhere in SEE … and it will not possible for one side to close the routes, as was the case this winter with Serbia which closed all its borders and nobody could [transmit] the electricity," Aleksandar Mijuskovic, executive director of SEE CAO, told SETimes.

But this is not just about quantity. "The electricity we are going to use will have much better quality since the usable capacities will be 150 instead of the current 100," Mijuskovic said. It's good news to an area that sees more than its share of chronic power outages.

Beyond that, he said, "This project sets a strong signal on the region's ability to work together for a common good."

Intrinsic to this is the fact that the SEE CAO becomes a true indicator of market integration, as opposed to cross-border trade.

"We are talking about small, fragmented markets. This means lots of borders. The great number of borders, in combination with opposing transmission capacity auction mechanisms, make trading in the region a rather difficult undertaking," Slavtcho Neykov, director of the Energy Community Secretariat on the establishment of the CAO in Vienna, told SETimes.

"There will be less bureaucracy. In fact, we expect the one stop- shop principle to apply," Neykov added.

It is also expected to boost energy efficiency and reduce dependence "This body represents an excellent platform for faster, cheaper and easier way of importing and exporting electricity," Ana B. Bovan, president of the Central European Development Forum in Belgrade, told SETimes. Serbia is expected to formally join the group at some point.

Consumers will have to wait two to three years to feel the first impact on prices "based on much better and easier electricity trade which will be provided by the CAO," Mijuskovic predicted. Prices will ultimately fall, though they are expected to rise in the interim from current levels that are considered low by EU standards.

The CAO also sends a strong political signal. "After the years of turbulence, we have ten TSOs that sit together and trade. To this end, I expect the other remaining TSOs to follow course," said Neykov.

SETimes correspondent Klaudija Lutovska in Skopje contributed to this report.

Source: SETimes.com