Business electricity prices expected to rise by 30 per cent

These companies have currently stepped up energy security efforts on the eve of launching the energy market liberalisation process.

What does liberalising the energy market mean?

The process of liberalising the energy market in countries of the European Union has started in the late 1990s with the aim of increasing competitiveness, efficiency, security and choice for consumers. In the Western Balkans, however, this process is still under way.

In Kosovo, liberalisation of the energy market is envisioned with the Law on Electricity adopted in 2017, but implementation has been delayed due to various circumstances.

Currently, the Energy Regulatory Office (ZRRE) has made the decision since 1 June all major companies concretely over 50 employed or with annual circulation of over 10m euros to switch to the open energy market. According to the ZERE, their number is over 1,000.

Currently, these businesses are supplied by the power supply operator (KESCO), as the main supplier licensed for energy at prices regulated by the ZRE.

While on June 1st, large companies must choose their own supplier, at unregulated prices, which are determined by demand and market bids.

Currently, 18 companies on Kosovo's free market are licensed, which provide electricity supplies -- most of which are from Kosovo, but also companies from the region.

Some of them have started negotiations with energy producers in the region to ensure the capacities needed for the supply of new customers.

Meanwhile, some businesses, such as Frutex in Suhareka, are looking for local companies to negotiate the current price.

Businesses Facing the Choice of New Providers
Drilon Brahimi, director general of the Tredint Group L.L.C, which was licensed for power supply late last year, says they are in the market research phase to secure more convenient prices, but have not signed any contracts with production companies from the region yet.

Many local companies, namely producers, have started sending us annual energy consumption profiles and are looking for information about the price. We're in the bidding stage. The concrete response for each is expected to be sent in early May”, he says about Radio Free Europe, broadcast Periscope.

However, Brahimi stresses that the price for the first months is expected to be up to 30 per cent higher than the current energy tariffs.

Currently, for household consumers and commercials who spend up to 800 kilowatts per hour within a month, the daily electricity price is 7.79 cents per kilowatt, while for those who spend more than 800 kilowatts, the share on this was estimated at 13.29 cents.

On May 1st, new tariffs -- with an increase of 16.1 percent -- will not apply to businesses with over 50 workers.

The 30 percent increase for large companies also warns Dallaku diamond from Enerco LLC.

He also says he has not signed any contracts with foreign companies yet and that market research is under way.

“liberalisation of the energy market is a new process, and challenges are being presented during implementation. As a problem at the time of preparation is the lack of information on the energy the businesses spend on the open market”, says Dallaku for Radio Free Europe.

The ZER's annual report says that last year over 5,400 gigawats per hour ( GWh has been the total amount of energy sold to all consumers in Kosovo. Out of this amount, 3,156 GWh or 58.4 percent were spent by family consumers, while the rest, 2.041 or over 37 percent, are spent by non-family consumers, and all businesses are involved in this category.

Palushi: We still have no concrete energy bids

The company for the production of Frutex fluids in Suhareka is one of the companies that will find the power supply company itself by June.

Its owner, Shaqir Palushi, says they have submitted calls for a meeting at all companies licensed for energy supplies, in order to negotiate the price. However, Palushi has yet to accept any answers from them.

I'm waiting on the next few days... but I don't think they're prepared for this process, especially in terms of turbulence that have prevailed in recent years over electricity prices”, he points out.

Palushi shows that for a month, he spends energy worth up to 400,000 euros. If 30 percent of the price increases, it would pay over 52 thousand euros for the same amount spent.

“Of course this will increase operational spending, but we will make efforts to initially impact the company's profit reduction, rather than increase prices”, he says.

Licensed, unprepared companies?
Economic interests in Kosovo have called for delaying this decision, since, according to them, even though companies are licensed, most of them have not had final clients and have only existed “on paper”, without real trade activity.

This transition, according to them, will destabilise supply and impact other products' prices.

For this reason, on March 21st, the Kosovo Economic Oda asked the ombudsman to initiate this issue in the Constitutional Court and ask for the suspension of the decision for at least a year.

The ombudsman confirmed to Radio Free Europe that he has accepted the Kosovo Economic Ode complaint and is considering it.

“For the Ombudsman this is a complex situation for the fact that these developments were made at the time when major institutions are in the creation of top”, it says in response, adding that the expensive electricity tariffs will have consequences on socio-economic rights for citizens.