• Established in July 2003, 5 Commissioners, currently there are 18 staff members.  The Regulatory Commission consists of 5 members which are nominated by the Government of Republic of Macedonia and appointed by the Parliament of Republic of Macedonia for a five-year period.
• The ERC regulates electricity, natural gas, district heating, oil and oil derivates and geothermal energy sector.
• The ERC has the following authorities:
  • monitor the operation of energy markets, for the purpose of securing reliable energy and energy fuel supply;

  • adopt regulations and tariff systems and adopt or approve tariff-setting methodologies for regulated energy activities;

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    adopt regulations, price-setting and tariff system methodologies on relevant energy type and/or energy fuel delivery to captive consumers;

  • adopt decisions on prices and tariffs, based on relevant regulations, methodologies and tariff systems;

  • adopt regulations on price-setting methodology for oil derivatives and fuels for transport and price-setting decisions for oil derivatives and fuels for transport, pursuant to the commitments assumed by the Republic of Macedonia;

  • approve the Gird Codes adopted by the energy system operators, by taking due consideration of their compliance with the commitments the Republic of Macedonia has assumed under the international treaties or the commitments of the energy system operators stemming from their membership in international associations;

  • on the proposal from the relevant energy system operators, approve the terms and conditions and connection and access charges for relevant transmission and distribution systems;

  • adopt Electricity Supply Rules, Heating Energy Supply Rules and Natural Gas Supply Rules;

  • adopt Rules on Electricity Supply of Last Resort and Natural Gas Supply of Last Resort;

  • adopt the Electricity Market Code and the Natural Gas Market Code;

  • when needed, request relevant system operators or electricity market operator to change terms and conditions, tariffs, rules, mechanisms and methodologies governing the connection to, access to, balancing or use of relevant systems or market;

  • take decisions upon applications submitted for exemption from the obligation on allowing third party access to energy systems or new interconnection gas pipelines;

  • keep the Registry of Preferential Generators and adopt decisions on awarding the status of preferential generator;

  • take due care for the protection and promotion of rights of energy and energy fuel consumers and of energy system users;

  • propose measures aimed to encourage competition on energy markets;

  • stipulate the terms and conditions, manner and procedure and adopt decisions on issuing, altering, transfer, suspension, revoking and termination of separate energy activity licenses and monitor the implementation of obligations stipulated in the energy activity licenses issued;

  • approve transmission and distribution grid development and construction plans and monitor their timely adoption and implementation;

  • approve and monitor the implementation of compliance programs adopted by relevant energy system operators, by means of which they secure full legal, financial, management and operational independence of operation from the vertically integrated energy companies to which they belong, as well as from related energy companies;

  • resolve disputes occurred between entities performing regulated energy activities and their users, including cross-border disputes;

  • cooperate with competent state authorities, local self-government unit bodies, entities performing energy activities, energy users and other organizations and institutions;

  • submit proposals to competent authorities on taking measures pursuant to their competences and in a procedure stipulated by law, against entities performing their activities in violation to the present law;

  • raise initiatives and propose adoption of new and amendments to existing laws and other regulations in the energy field;

  • participate in relevant regional and international organizations and cooperate with other regulatory bodies, for the purpose of contributing to development of regional energy markets, pursuant to the commitments assumed under the ratified international treaties;

  • adopt the Book of Operation and other internal acts related to its operation; and

  • perform other matters pursuant to the present law.

• The operation of the ERC is financed by own funding sources, secured by means of charges collected on the basis of license issuance and collection of annual charge levied to the holders of energy activity licenses.

Electricity

In March 2004, the Law on restructuring of AD ELEKTROSTOPANSTVO NA MAKEDONIJA – vertical integrated company for generation, transmission and distribution of electricity was brought, by which the company was divided into 2 companies:

• AD MEPSO – state owned company for transmission of electricity, and
• AD ELEKTROSTOPANSTVO NA MAKEDONIJA – state owned, vertical integrated company for generation, distribution and supply with electricity.

In 2005, AD ELEKTROSTOPANSTVO NA MAKEDONIJA – state owned, vertical integrated company for generation, distribution and supply with electricity was separated into 3 companies:

• AD ELEM – state owned generation company;
• AD TPP Negotino - state owned generation company; and
• AD ESM Distribution – state owned distribution and supply company.

On 17th of March 2006 the Government of the Republic of Macedonia announced that the Austrian company EVN AG was the winner on the tender for sale of majority package of shares in AD ESM Distribution.

AD “Elektrani na Makedonija” (AD ELEM) is share hold, state owned company holder of the license for performing the energy activity: generation of electricity.

AD Negotino is electricity producer that is engaged by MEPSO for electricity production, power and ancillary services and as a reserve in the power system.

AD MEPSO is share hold, state owned company, holder of the licenses for performing the following energy activities: transmission of electricity, operation of the power system, operation and organization of the electricity market.

AD EVN MAKEDONIJA (90% by EVN – Austria, 10 % state owned) is holder of the licenses for performing the following energy activities: operation of the distribution system and distribution of electricity, generation of electricity, and retail supply of electricity for tariff customers.

AD ELEM Podruznica Energetika is state owned company, holder of the licenses for performing the following energy activities: operation of the distribution system and distribution of electricity, and retail supply of electricity for tariff customers.

There are 9 eligible customers of electricity connected to the transmission network from 1st of January 2008.

By 31.03.2011, ERC issued 67 licenses for performing energy activities in the electricity sector, from which 28 licenses has been issued for performing energy activity electricity trading.

ERC determines:

• price for generation of electricity from regulated producer;
• price for transmission of electricity;
• price for distribution of electricity;
• price for retail supply service of electricity;
• average price for retail supply of tariff customers connected to distribution grid; and
• tariff rates for customers.

Electricity prices are setting and approved according the following bylaws, issued by the ERC:

• “Rulebook for electricity prices for tariff customers” (for generation and supply) ("Official Gazette of the Republic of Macedonia" No. 21/2011)
• „Rulebook for determination of regulated maximum revenues and average tariffs for transmission, services for electricity market operator and distribution of electricity” ("Official Gazette of the Republic of Macedonia" No. 21/2011)
• „Tariff system for electricity” ("Official Gazette of the Republic of Macedonia" No. 13/2010).

The average price for retail supply of tariff customers connected to distribution grid was increased by 5,48 % from 1st of March 2011.

Natural Gas

There are no domestic sources for production of natural gas and the supply of natural gas comes from imports. Gas has been imported from Russia since 1997, via a pipeline (capacity 800 million m3).

Gas is used in the largest percentage by the industrial customers directly connected on to the transmission system and for district heat generation and in smaller percentage by the industrial customers connected on to the distribution system.

Development of the distribution of natural gas is on the very beginning phase, in construction phase. ERC during 2008 issued first license for distribution (Kumanovo) and in March 2009 were issued license for natural gas distribution, for operation of the natural gas distribution system and for supplier of tariff customers, connected on the distribution system for “Free technological industrial development zone in Skopje” formed by Government of the Republic of Macedonia.

The new CHP (powered by natural gas) began trial operation in late 2010.

Up to now ERC issued 12 licenses for performing energy activities in the sector of natural gas, from which 6 are licenses for trade with natural gas.

In 2007 ERC issued a Decision by which the company Toplifikacija AD – Skopje is announced as an eligible customer of natural gas, which applied from 01.01.2008.

In 2010, Energy Regulatory Commission issued a Decision to TE-TO AD Skopje, with which it is declared eligible consumer of natural gas, which applied from 01.01.2011.

ERC determines:

• price for transportation and services of the system operator;
• price for supplying the tariff consumers which are connected on the system for transport of natural gas;
• selling price for tariff consumers connected on the system for transport of natural gas ( consist of import price and tax for import, price for transport and services of the natural gas system operator and price for supplying the tariff consumers connected on system for transport of natural gas);
• price for distribution and for the services of the operator of the natural gas system for distribution of natural gas; and
• price for supplying the tariff consumers connected on system for distribution of natural gas.

The prices for transport, distribution and supply with natural gas, are setting and approved according the following bylaws, issued by the ERC:

•  “Rulebook on the method and conditions for regulating prices for transport, distribution and supply with natural gas“, ("Official Gazette of the Republic of Macedonia" No. 161/2009);
•  “Tariff system for transport of natural gas“, ("Official Gazette of the Republic of Macedonia" No. 94/2005); and
•  “Tariff system for sale of natural gas to tariff customers“, ("Official Gazette of the Republic of Macedonia" No. 94/2005 and 43/2010).

New Energy Law ("Official Gazette of the Republic of Macedonia" No. 16/2011) was adopted in February 2011. ERC should adopt and issue secondary legislation according to the new Energy Law in the period of 6 to 18 months.

The IPA Twinning Project for Institutional Strengthening of the ERC, officially have started on 01.01.2010 and will end on 30.04.2011. The IPA Project for Technical Assistance to the ERC, officially have started on 18.09.2009 and will end by 18.07.2011. These projects will provide technical assistance and recommendations for ERC regarding the implementation of the activities and tasks defined in the Energy Law and the Energy Community Treaty, as well as preparation of manuals for the future development of the market and criteria for opening the market in accordance with the requirements of the Treaty, reports for review of tariffs and prices, rulebooks on regulating prices, new tariff methodology for prices and other bylaws.

ERC is a regular and full member of the Energy Community Regulatory Board (ECRB) and a full member of the Energy Regulators’ Regional Association (ERRA). ERC participates on the meetings of the working groups on electricity, natural gas and consumer protection of the ECRB, the meetings of the Coordinated Auction Office Implementation Group in the Southeast Europe, as well as on the meetings and trainings provided by ERRA.