1. M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 15 – ENERGY Bilateral screening: Chapter 15 PRESENTATION OF MONTENEGRO Brussels, 10-11 April 2013

2. Chapter 15: Energy GAS Danilo Barjaktarovic Ministry of Economy danilo.barjaktarovic@mek.gov.me M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 15: ENERGY

3. Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union o Relevant Acquis – EU Legislation o National legislation o Institutional framework o Implementation o Main challenges CONTENTS Chapter 15: ENERGY

4. Chapter 15: Energy RELEVANT ACQUIS – EU LEGISLATION M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Celex: 32009L0073 Celex: 32009R0715 Celex: 32009R0713 Celex: 32011R1227 Celex: 32008L0092 Celex: 32003D0796 Chapter 15: ENERGY

5. NATIONAL LEGISLATION Energy Law ("Official Gazette of Montenegro", No. 28/10, 40/11, 06/13) Secondary legislation not yet developed (no gasification expected within 3 – 5 years) Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 15: ENERGY

6. Chapter 15: Energy THIRD ENERGY PACKAGE IN RELATION TO GAS M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union  Partially transposed into national legislation through Energy Law ("Official Gazette of Montenegro", No. 28/10, 40/11 and 06/13)  Will be fully transposed by:  ammendments to the Energy Law - deadline: 1 January 2015  secondary legislation – deadline: at latest 90 days after construction permit is issued for gas transmission pipeline (art. 193 Energy Law) Chapter 15: ENERGY

7. Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union INSTITUTIONAL FRAMEWORK Parliament of Montenegro Government of Montenegro Gas undertakings (when established) Ministry of Economy Energy Regulatory Agency Chapter 15: ENERGY Administration for Inspection Affairs

8. Chapter 15: Energy ADMINISTRATIVE CAPACITIES Ministry of Economy -Sector for Energy Ministry of Economy -Sector for Energy Energy Regulatory Agency 8 employees + 1 trainee 1 employees 28 employees + 2 trainees M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 15: ENERGY Administration for Inspection Affairs

9. Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union PUBLIC SERVICE OBLIGATIONS AND CUSTOMER PROTECTION  Universal service rights to customers in gas are in major parts already ensured, but  The provision of the Energy Law Art. 55.2.1 shall be modified or amended to enable also foreign companies to obtain a supply license and supply customers in Montenegro  Supplier switching process well defined but the deadline of 3 weeks is to be transposed in the Energy Law (possible transitional period min 3 years)  Final closure account within 6 weeks is to be transposed in the General Supply Conditions  TSO, DSO and Public Supplier to be determined  DSO and Public Supplier to be unbundled after the number of customers reaches 100.000 Chapter 15: ENERGY

10. Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union PUBLIC SERVICE OBLIGATIONS AND CUSTOMER PROTECTION  Gas transmission, distribution and public supply are public services  Customer protection is mostly ensured (different customer protection measures by suppliers, supply of vulnerable customers) Missing requirement: a single point of contact for all customers to receive information on their rights Pending decision on out-of-court dispute settlement Chapter 15: ENERGY

11. Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union AUTHORISATION PROCEDURE FOR NEW GENERATING CAPACITY Gas infrastructure requires authorisation Authorisation requirements specified in Energy Law ("Official Gazette of Montenegro", No. 28/10, 40/11 and 06/13) Rulebook on criteria for issuance of authorization for gas to be issued Missing criteria are to be explicit in Energy Law Chapter 15: ENERGY

12. ENERGY LAW – GAS TRANSMISSION AND DISTRIBUTION Energy Law defines: – Rights, duties and responsibilities of Transmmission and Distribution System Operators – Transmission and Distribution Grid Codes – metering of gas supply – Access to metering data Secondary legislation planned after issuing of construction permit for gas transmission pipeline Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 15: ENERGY

13. Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union ENERGY LAW – TRANSMISSION AND DISTRIBUTION The Energy Law is partly compliant with EU legislation The Energy Law needs amendments regarding: o explicitly specifying the model of TSO unbundling o designation of TSO o ownership of distribution system within DSO o preventing DSO from taking advantage of being part of VIU to distort competition, o prohibition of branding or communication which would create confusion with the separate entity of the supply branch o preventing information about DSO’s activities which may be commercially advantageous from being disclosed in a discriminatory manner o transparency requirements  Deadline for adopting amendments in law: 01 January 2015 Chapter 15: ENERGY

14. Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Designation and independence of regulatory authority General objectives of the regulatory authority Duties and powers of the regulatory authority Regulatory regime for cross border issues Compliance with the Guidelines Record keeping STRONGER POWERS AND INDEPENDENCE OF NATIONAL REGULATORY AUTHORITY Chapter 15: ENERGY

15. NATIONAL REGULATORY AUTHORITY Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 15: ENERGY M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 15: ENERGY

16. One single regulatory authority at national level NRA is legally distinct and functionally independent from other public or private bodies NRA acts impartially and transparently Legal accountability – Decisions fully reasoned & justified – Decisions subject to judicial review – Decisions are available to the public Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union DESIGNATION AND INDEPENDENCE OF REGULATORY AUTHORITIES Chapter 15: ENERGY

17. Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Autonomous decision making already implemented by law: – ex ante: no interference from the government nor from any other public or private entity prior to a decision by the NRA – ex post: decisions of the NRA are immediately binding and directly applicable no need for having any approval or consent from any other entity cannot be subject to review, suspension or veto by the Government, the Ministry or by any entity controlled by the Ministry or Government INDEPENDENCE OF NRA – DECISION MAKING Chapter 15: ENERGY

18. INDEPENDENCE OF NRA – RESOURCES Budgetary autonomy: – Separate annual budget allocation – Autonomous implementation of the budget, – Resources surplus at the end of the year is transfered to the State budget (corresponding existing provision in the Energy Law expire 2016 ) Adequate human and financial resources  Further capacity building of NRA  Staff training, particularly to gas sector activities regulation Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 15: ENERGY

19. INDEPENDENCE OF THE NRA – BOARD MEMBERS Appointed for fixed term of 5 years, renewable once Rotation scheme: not same end date of term for all board members May be relieved from office during their term only if o they no longer fulfill the conditions set out in the Directives (breaches of the independence or impartiality of the NRA) o or have been guilty of serious misconduct under national law (fraud, bribery,…) o Energy Law is to be changed in the part relating to the dismissal of all Board members Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 15: ENERGY

20. INDEPENDENCE OF THE NRA – STAFF Act independently from any market interest; Do not seek or take direct instructions from any government or other public or private entity when carrying out the regulatory tasks  without prejudice to close cooperation, as appropriate, with other relevant national authorities or to general policy guidelines issued by the government not related to the regulatory powers and duties Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 15: ENERGY

21. GENERAL OBJECTIVES OF NRA General objectives of the regulatory authority under Art. 36 of Directive 2009/72/EC are to be completely transposed into the Energy Law Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 15: ENERGY

22. CORE DUTIES OF THE NRA NRA sets Methodologies for regulatory revenue and prices, gas use and storage, ancillary and system service and balancing service, for setting regulated tariffs for tariff customers NRA approves Methodologies for setting of tariffs for access to transmission and distribution networks, setting of tariffs for last resort supplier NRA sets the methodology and approves tariffs ensuring that there are no cross-subsidies NRA takes care about consumer protection  moreover: in case of delay, NRA sets interim transmission and distribution tariffs Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 15: ENERGY

23. MONITORING DUTIES NRA monitors compliance of energy undertakings, including transmission and distribution system operators, system owners with their obligations, including as regards cross-border issues; Extended monitoring duties – Access to networks and infrastructure – Markets and competition – Consumer protection, etc Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 15: ENERGY

24. Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union REQUIRED ENHANCED POWERS NRA issues binding decisions NRA carries out investigations on functioning of the markets and imposes proportionate measures NRA requires relevant information from undertakings NRA has appropriate rights of investigation and relevant powers of instruction and for dispute settlement of  customer complaints on operators’ decisions  Disputes among undertakings or among consumers and undertakings, when NRA is empowered by contracting parties NRA at present may not impose penalties Chapter 15: ENERGY

25. NRA ENHANCED ACCOUNTABILITY NRA decisions are issued in accordance with the General Administrative Procedure and are subject to the judicial review NRA’s decisions may be examined by the Administrative Court Decisions are public while preserving confidentiality of commercially sensitive information Chapter 15: Energy M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Chapter 15: ENERGY

26. Thank you for your attention! QUESTIONS