Filenews 19 March 2023 - by Christakis Hadjilaou*
According to information that has seen the light of publicity and taking into account what has been said in the context of the recent meeting of the Energy Committee of the Parliament on the much-discussed issue of the long delays of the full opening of the Competitive Electricity Market (AAH), it is considered necessary, for the purpose of informing the Cypriot citizen, to provide a brief historical overview of events and actions, concerning the long-term efforts of the competent bodies for the opening of the Electricity Market in Cyprus.
Bilateral contracts
The first attempt for the operation of the Electricity Market in Cyprus concerned the Bilateral Contract Market Model. The first Electricity Market Rules for the implementation of this Model, which had been prepared by the Cyprus Transmission System Operator (TSO), had been approved by the Regulatory Authority for Energy (CERA) in 2009.
Due to the fact that there was obviously no interest in activating and developing competition in the context of the Electricity Market based on the Bilateral Contracts Market Model, in 2014 CERA issued Decision 1191/2014, aiming at "the Detailed Diversification Plan of the Framework for regulating the Operation of the Electricity Market of Cyprus".
The new model and the transitional
Subsequently, in 2015, CERA issued the Regulatory Decision 01/2015, which concerned "the Detailed Diversification Planning of the Framework for the Regulation of the Operation of the Electricity Market of Cyprus". The revised Electricity Market Rules for the implementation of the new Competitive Electricity Market Model (Power Consortium and Bilateral Contracts) have been approved by CERA in 2017, with Decision 84/2017.
In this context, it is noted that, since September 2017, the opening of the Electricity Market has been achieved on the basis of the Regulatory Decision 04/2017 of CERA for the implementation of a transitional regulation in the Electricity Market of Cyprus before the full implementation of the new Model for the Competitive Electricity Market (AAH). It is noted that the transitional regulation of the Market provides the possibility for trading through bilateral contracts.
The adventure for the software
Based on the revised and approved Electricity Market Rules, on the basis of Decision 84/2017, in 2018 the TSO proceeded with the tender procedure for the procurement of an Electricity Market Management System.
In this regard, it is noted that the initial timetable for the start of operation of the new Model for AAH, as defined in the Regulatory Decision 01/2017 of CERA, set a deadline of 01/07/2019.
It was not possible to comply with this timetable due to the cancellation of the tender issued for the procurement of the Market Management System. In the context of the aforementioned tender, only one bid of €15 million was submitted, significantly exceeding the estimated amount for the project, which amounted to €6 million. For this reason, the TSO decided to cancel that tender.
In 2019, the TSO issued a new revised tender. The result of the revised tender was the signing of a contract in April 2020 with the company "Grid Solutions", "General Electric (GE)", for the amount of €5.5 million, i.e. 10 million less than the amount of the bid of the first tender. The contract, signed with "General Electric (GE)" for the implementation of the Market Management System, provided for the completion of the project by October 2021.
In this regard, it is noted that the delays in the opening of the Competitive Electricity Market have been a very important reason for the dismissal of the previous Director of TSOC by the Council of Ministers in December 2020.
It is noted in this regard that during the period of dismissal of the previous Director of TSOC, in addition to the completion of the project by "General Electric (GE)", which was foreseen until October 2021, several other serious issues were pending, which made it difficult or even impossible to open the AHS. Among other things, these issues concerned the approval of the revised Electricity Market Regulation Law for the independence of the TSOC, the approval of the TSOC staff regulations, issues of understaffing, as well as the transfer of staff from EAC to TSOC.
Today and after more than two years from the assumption of the duties of the new Director of TSOC, in December 2020 and while we are heading into the third trial period of the Electricity Market, no deadline has yet been set for the start of operation of AAH.
It is noted that periodically the competent bodies (CERA and TSOC) had made estimates for the opening of the AAH that could not be verified. CERA, in the context of the Introductory Note of the Annual Report for 2020, had stated verbatim that "CERA looks forward based on current data to the introduction of a healthy competition in the electricity market of Cyprus by the end of 2021 beginning of 2022". In October 2021, according to press reports, the Director of TSO had stated that the TSO was expected to be operational towards the end of 2022.
According to estimates, further delays for the opening of the TDI will last more than two years, since serious staffing issues, which were also pending in a previous management, such as the understaffing of the TSO and the transfer of staff from EAC to TSO, still exist.
Will it bring a decrease in the price of electricity?
With what has been said in this text, it is concluded that the efforts to open up the Electricity Market in Cyprus had obviously begun before 2009, the year in which the first Electricity Market Rules, concerning the Bilateral Contract Market Model, were adopted. Five years later, and since there was no interest in activating and developing competition based on the Bilateral Contracts Market Model, this Model was abandoned and it was decided to adopt the new AAH Model (Power Consortium and Bilateral Contracts), on the basis of Regulatory Decision 01/2015. The adoption of this decision essentially marks the beginning of the efforts for the implementation of the new Model, which eight years later are still ongoing and it is unknown when they will be completed.
In this connection, it should be noted that many people express doubts about the usefulness of this model and whether it will lead, in the short and rather medium term, to a reduction in the price of electricity.
* Electrical Engineer, with many years of experience in the operation of the electrical system
