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The Montenegrin Government: proposals for amendments to the law on energy and industrial emissions are good, but that their implementation should be postponed

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The government assessed that the proposals for amendments to the law on energy and industrial emissions, which would enable the Montenegrin electric distribution system (CEDIS) to provide cheaper electricity, and the Thermal Power Plant to operate longer, in principle, represent good solutions, but that their implementation should be postponed in order for the adoption of these solutions involved several relevant entities. The MPs adopted these two acts last night.

The group of deputies “Peace Is our nation” proposed amendments to the law on energy according to which CEDIS would buy electricity from Elektroprivreda (EPCG) to cover technical losses at the same prices at which it reimburses the cost from consumers, and the decision on this would be made by the Government.

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The right to operate the Pljevlja thermal power plant is extended until the end of the Government’s negotiations with the Energy Community (EC) and the European Commission and the proceedings before the Secretariat of the Energy Community.

CEDIS now has to buy electricity from EPCG at prices that depend on the formula from the stock exchange in Hungary, that is, at 116 euros per megawatt-hour (MWh), and sell it at the regulatory allowed price of 52 euros. That is why CEDIS, as previously announced by the company, has annual losses of over EUR 10 million, and if it were to buy that electricity at the prices at which it is sold from other regulatory permitted income, it would have a profit of over six million EUR.

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Amendments to the law now provide that in the event of an extreme rise in electricity prices on the market, prices are determined separately to cover approved technical losses to network operators.

In the Government’s opinion on amendments to the Law on Energy, it is stated, among other things, that from the submitted proposal it is unclear who will propose that price and according to which methodology, since no criteria or conditions for its determination have been prescribed.

– Furthermore, if funds are reimbursed to producers due to the introduction of this limitation from the budget, it is completely understandable that the opinion of the Agency for the Protection of Competition (AZK) should be sought for the submitted proposal. If this is not accepted, it should be supplemented with a provision that will stipulate that the Government’s decision is made with the previously obtained opinion of the AZK. Also, if all producers (including EPCG and all privileged producers who exit the incentive system in the following period) undertake to provide the system operators with energy to cover losses, we draw attention to the fact that there is no methodology that prescribes the amount of energy and in what way the producers are obliged to provide the same to the system operators – it is written in the opinion of the Government.
It Is further stated that the submitted proposal related to extreme price growth is unclear as to what extremely high price means and in relation to which reference value this wording refers to.

– After this change was made, it would mean in relation to the initial value when the change was made and the same could not be applicable in relation to the price from an earlier period. By introducing the proposed norm, the obligation would also be imposed on privileged producers who enter the market to sell electricity to cover losses. From the submitted proposal, it is not possible to see whether the impacts that may arise if these producers have already contracted the sale of their entire energy have been taken into account – it was stated in the opinion of the Government.

Rampa EC Secretariat

According to the current law on industrial emissions, the Pljevlja Thermal Power Plant would have to stop operating by the end of 2023, because the harmonization of its operation with EU regulations has not been resolved in the past ten years. Its reconstruction, which will solve only part of the problem with the emission of harmful gases, started only in April of this year.

In its opinion on amendments to this law, the government stated that the Secretariat of the Energy Community (EC) sent an introductory letter on April 20, 2021, and thereby initiated the procedure for resolving disputes against Montenegro, due to non-compliance with the Treaty establishing the EC.

– In the procedure conducted before the State Secretariat, Montenegro is a party to the procedure, for which reasons there is a need to resolve issues that would affect the course of the procedure through the agreement and cooperation of all relevant entities. Bearing in mind the obligation to harmonize with the EU policy, and that the aforementioned amendment raises the question of compliance with already established restrictions, the Ministry of Capital Investments addressed the Secretariat on this issue and requested an opinion on amendments to the law. The Secretariat submitted an opinion in which it was pointed out that it cannot support this amendment to the provisions of the law on industrial emissions – it says, among other things, in the opinion of the Government, local media reports.

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