Georgia Energy Regulatory Partnership:
Paving the Way for EU Energy Community Membership

The Energy Sector

To address issues in the country’s energy sector, in recent years Georgia has worked to dramatically reform its electricity market. The reforms liberalized the market, increased the transparency of the electricity sector, and enabled an increase in private investment in the country’s generation capacity.

As of March 2017, Georgia was poised for accession to the EU's Energy Community, the culmination of a decade-long journey since becoming an observer to the Energy Community Treaty in 2007. This occasion served to demonstrate the considerable effort to bring Georgia’s primary energy legislation and the regulatory structure of the Georgian National Energy and Water Regulatory Commission (GNERC) in line with the EU’s Third Energy Package requirements.
 

Our Work

With the support of the United States Agency for International Development (USAID), NARUC’s work with GNERC evolved to meet the specific needs of the regulator during its development and as the country transitioned to a more EU-oriented, competitive, and transparent energy sector.

NARUC’s engagement provided the Georgian regulator with capacity building and tools to achieve its regulatory goals in line with the EU and Energy Community requirements and priorities, including increasing cross-border trade and improving liberalization efforts. GNERC made significant gains on transparency, both increasing engagement with the public regarding its own actions as well as the electricity system in general. The partnership also provided a platform for regulators and other stakeholders to exchange best practices.
 

Selected Results

Regulatory Accounting
Activities throughout the Partnership significantly contributed to the adoption of a Uniform System of Accounting in the Electricity Sector, which is expected to be implemented by the end of 2019. Workshops throughout the Partnership leveraged US expertise to develop GNERC’s technical understanding of regulatory accounting and build toward adoption of a Uniform System of Accounting in the Electricity Sector.

Sector Reform
GNERC developed Tariff Setting Methodology for Electricity Generation, Transmission, Dispatch, and Electricity Market Operator Service; and Tariff Setting Methodology for Electricity Distribution, Pass Through, and Consumption Tariffs, which marked the culmination of efforts throughout the Partnership to revise rate-setting principles in line with market-based and competitive approaches. 

GNERC also adopted Commercial Standards of Service Quality rendered by power distributors. It was the first time that levels of compensation for damages resulting from non-delivery of services were established and provided for the creation of electronic logs that make it possible for GNERC to monitor customer requests and claims in real time.