Filenews 31 August 2021 - by Chrysanthos Manolis
A very important round of meetings is opened today by the Parliamentary Committee on Energy, so that as soon as possible it will be possible to adopt three bills concerning the regulation and supervision of the production and supply of electricity, within the framework of amendments to EU law, in which the Republic of Cyprus should already have been harmonized.
As we have written in previous reports, on the three bills there are differing to conflicting views between authorities, bodies and organisations, the public and private sectors, which foreshadows controversies before the parliamentary committee, but also for a possible prolongation of the consultations, even though considerable time has already been lost, mainly under the responsibility of the executive.
It should be noted that the harmonisation with Directive (EU) 2019/944, concerning common rules for the internal market in electricity and the amendment of Directive 2012/27/EU (recast), had to be completed by 31 December 2020, which was not done. In their final form, the bills were tabled in the House only at the end of April 2021. The European Commission has already sent a letter of formal notice on 3/2/2021 for infringement. The Ministry of Foreign Affairs replied to the Commission's letter of formal notice by letter on 2/4/2021, attaching a relevant table with a timetable until the submission of the relevant harmonizing bills to Parliament for a vote. If harmonisation is delayed, the Commission is sure to proceed with a reasoned opinion, which is the second stage of the infringement procedure.
The parliamentary Committee on Energy, under its new composition, was briefed in general terms on the content of the bills, at a meeting last July and today begins the article-by-article discussion, which, with the choice of MPs, will take place with the participation of a number of stakeholders, such as the Minister of Energy or her representative, the Energy Service of the Ministry, the Ministry of Finance, the Audit Office, the Commission for the Protection of Competition (EPA), CERA, the TSO, the EAC, the EAC guilds, the ETEK, PASYDY, OEB, the CCCI, the Association of Participants in the Competitive Electricity Market, representatives of consumer associations, as well as executives of private companies producing electricity from RES and executives of licensed private companies for future production of conventional electricity.
CERA and staff objections
CERA - and its staff - maintain serious objections, mainly on the bill that will re-establish the independent energy regulator. On some of the essential issues raised by CERA, the Ministry of Energy seems for the moment not to agree, as does the Ministry of Finance. On these points, the Audit Office, through its own memorandum in Parliament, appears to adopt, at least in their majority, the positions of the ministries.
In an extensive note submitted to the Energy Committee, CERA expressed its disagreement with the need to adopt a special law governing its operation and argued that the bill essentially attempts to weaken its role, at a critical juncture for the energy market sector. He also argued that through the bill there is a visible risk that its financial and operational independence, guaranteed by the EU acquis, will be affected, through the government's intervention in the financial and human resources of CERA.
Particularly strong is the disagreement of CERA with the provision of the bill, according to which any reserves of the CERA fund should be transferred to the fixed fund of the Republic. CERA's staff also object to this provision, as the Authority's fund includes funds relating to pension benefits, salaries, etc.
The positions of the Auditor General
On the matter, the Auditor General also submitted to parliament his own positions, who essentially takes a position in favour of the controversial article on the reserves of the CERA Fund (i.e. transfer of the reserves to the fixed fund of the Republic, something that was essentially requested by the Ministry of Finance and accepted by the Ministry of Energy). As Noted by Mr. Michaelides "our service agrees with the provisions of this article" and points out that on 31/12/2019 the surpluses and cash balances of CERA were €6.3 and €10 million respectively and that it had made a recommendation to study the possibility of adjusting the charges imposed by CERA, "so as not to create unnecessary surpluses and furthermore to reduce the accumulated surpluses within a reasonable time horizon".
Elsewhere in the memorandum, the Auditor General appears to favour the clearer wording of some articles, so that it is clear that the annual financial statements of CERA and the TSO will be submitted to the Ministries of Finance and Energy, before they are audited by the Audit Office.
Clean talk about competition wants the PSC
Objections to articles of the bill on the regulation of the electricity market law were expressed to the Parliament and the Committee for the Protection of Competition. Among other things, it "expresses its concern, since certain legislative regulations of the bill in question do not clearly separate the competences and powers held by both CERA and the PSC, with the risk of conflicting and contradictory opinions and decisions on the same issue arising, unduly complicating the implementation of the competences and powers of the Commission for the Protection of Competition".
In the same letter, 'the Commission makes particular reference to the general principle of 'delegatus non potest delegare', according to which the competence conferred by a law on one body cannot be exercised by another (ie body), as indicated in Article 17, for the competence of an institution, of the General Principles of Administrative Law Act of 1999, as amended'. The PSC "notes as a more general comment that the Commission is the only national administrative body responsible for the protection of competition, as defined under Article 35 of Regulation (EC) 1/2003" and asks that "it be clarified that CERA does not enter into the work of the PSC, but can only consult with it and take any preventive measures to prevent practices that may restrict competition (ax ante regulations)".
The director of the Transmission System Operator is unsteered
Of interest is the letter of the Director of the Cyprus Transmission System Operator (TSO) Stavros Stavrinos to the Chairman of the Energy Committee, Kyriakos Hatzigiannis, in which he expresses his concern about the possibility of losing his position, in which he was appointed by the President of the Republic only on December 22, 2020, in place of the dismissed (by the President of the Republic) Christos Triros.
Following an opinion he received from the legal advisor of the TSO (George Korfiotis), Mr. Stavrinos mentions to Mr. Hatzigiannis that "it is not mentioned in the bill (on the regulation of the electricity market) that the current director of the TSO will automatically be the first executive director of the TSO and a problem arises, because the new bill repeals the existing law, on the basis of which I have been appointed." In his opinion, Mr. Korfiotis states that the bill does not ensure that the TSO, Article 59, is a continuation and is the one that has been established under the repealed law". Mr. Korfiotis also points out in a letter to Mr. Stavrinos that "the impediments provided for in paragraph 6 provided for (in the bill) for the Executive Director of the TSO have been enriched with the impediment of employment during the last two years in an employer holding a production license (electricity.), which will cause a problem in your appointment to the position of executive director of the TSO, since about a year ago you were serving in the EAC".
