Kosovo Energy Regulatory Partnership: Supporting Market Reforms

The Energy Sector

As of March 2017, power generation in Kosovo is dominated by lignite-based thermal plants. Investments in other generators are delayed, and there is a prevailing lack of independent domestic production. The Kosovo Distribution and Supply Company was privatized in 2012-2013, and the distribution system operator and the supply company have been separated since January 2015. As of December 2016, the unbundling of distribution and supply was completed (KEDS and KESCO), although there was no real competition in the retail sector, as only one additional supplier from Croatia had registered for a supply license. Since January 2015, all consumers have a right to choose their retail supplier, and yet due to lack of choice and cross-subsidization in the rates, no real retail market exists.
 

Our Work

Through the assistance of the United States Agency for International Development, NARUC supported growth in the Energy Regulatory Office of Kosovo's institutional, decisional, and technical capacities across a wide range of issues, helping the regulator achieve gains in line with international best practices. Along with work done in a regional context, NARUC’s partnership with ERO led to the enactment of critical market reforms that met Kosovo’s national energy goals and supported efforts to enhance consumer knowledge of energy and tariff issues and improve the quality and availability of energy.

Through carefully orchestrated training and technical assistance, ERO drafted laws and policies to strengthen institutional capacity, transparency, and its ability to interact with stakeholders. Through assistance from NARUC, ERO also made significant reforms to its tariff and rate design processes and positioned the country for compliance with requirements under the Energy Community’s Third Energy Package.

 

Selected Results

Transparency
During an extensive process that included job shadows and in-country assistance over several years, ERO significantly increased its level of transparency and accountability to the public. ERO established an electronic customer care database, which improved its ability to manage customer complaints efficiently and monitor its licensees through enhanced reporting capabilities. ERO also developed and revised External and Internal Communications Strategies, which outlined its approaches tor external engagement with stakeholders and consumers and internal communications and workflows.

Public Relations
Through a job shadow in the US, ERO significantly improved day-to-day operations, reducing response times for routine media requests from one day to several hours and from two days to 24 hours for technical or sensitive requests. ERO also more fully integrated its public relations staff into organizational operations and took proactive steps to better inform the public about its work, including by providing more advance notice for board sessions to increase public participation.

Utility Privatization
NARUC supported ERO in providing significant training and knowledge sharing to support the privatization of KEK Electricity Distribution and Supply, the distribution and supply utility. NARUC worked with ERO to revise its tariff process and methodology, both before and after the privatization. ERO instituted a 5-year price control period with annual reviews after the privatization, all geared towards providing price stability and assurance for investors.