The Cyprus Energy Regulatory Authority (CERA) will within the week issue a decision ordering the state power company to segregate its accounts so that its different costs are reported separately on consumers’ bills.
The move marks the beginning of the accounting and operational separation of the Electricity Authority (EAC), energy regulator Giorgos Shammas said.
CERA expects the EAC to submit its first separated accounts by August, he added.
The power utility’s operations are to be separated into production, transport, distribution and supply, and the rates for each operation will be listed separately on bills.
Private electricity operators will be required to do the same in the future once the market is fully opened up.
After the accounting separation, the next step would be the EAC’s legal unbundling, that is, its breakup into multiple companies, on which the government plans to commission a study.
EAC workers – with civil servant status – have linked this unbundling to privatisation, which they fiercely oppose.
Last month CERA published a regulatory decision for the new state of affairs in the energy market, proposing the unbundling of the EAC’s operations.
Under the ‘net pool’ model, the EAC’s operations are unbundled, and the production and supply operations separated. EAC Production will then strike bilateral agreements with suppliers (EAC Supply and private players) for the sale of energy, at regulated prices. Other licensed operators may also participate.
This regime would apply to the bulk of electricity production. For the remainder of the capacity, which CERA has not settled on but estimates at 10 to 20 per cent, prices would be set dynamically, based on daily bids.
This would be done via the Day-Ahead Market, where half-hourly energy blocks are traded for the next day: participants submit offers/bids where they specify the quantity and the minimum/maximum price at which they are willing to sell/purchase.
The government plans to switch to a ‘competitive electricity market’ by mid-2016.
But according to Shammas, the target date needs to be pushed back, as the changes would also require beefing up the energy regulator with manpower and computer infrastructure – which takes time.
The new proposed regimen also provides that Renewable Energy Sources (RES) projects of over 1 megawatt will no longer be subsidised.
Shammas said the final market rules will be written up over the following six to seven months by the Cyprus Transmission System Operator, giving stakeholders the time to comment.
