Free energy market pushed back

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The much-awaited liberalisation of Cyprus’ energy market has been slotted for mid-2023, as the government informed the House it is adding the final touches to the regulatory framework.

The Transport Ministry told MPs on Tuesday that authorities will submit regulations for the Transmission System Operator authority within the coming weeks.

In comments following a meeting of the House’s Energy Committee, chair and DISY MP Kyriacos Hadjiyiannis told the media that the electricity market will be open in four to five months following parliamentary approval.

Hadjiyiannis said that with the liberalisation of the electricity market, private companies could produce electricity, either conventionally or with renewable sources, which they will channel into the grid.

As he argued, consumers can choose the provider with the lowest prices, creating a healthy competitive environment.

Hadjiyiannis said a competitive electricity market operates throughout Europe, stressing that Cyprus could not be left out.

He noted that private power-producing companies are already offering contracts to large consumers, with prices around 10% below those offered by the Electricity Authority of Cyprus (EAC).

The MP said these companies are waiting for an open market to proceed with signing contracts with large consumers.

Authorities were heavily criticised for the delay in the implementation, as liberalisation plans of the energy market have taken more than a decade, as the first law was introduced in 2003.

Based on that roadmap, the electricity market should have been liberalised in 2012.

A draft of the regulations in July to the legal services was found to be incomplete by lawmakers.

Even when regulations are approved, the authority will still need significant time to hire and train staff.

Pending regulations prevent the administrator’s impartiality towards private electricity producers and suppliers, as TSO employees are currently civil servants.

Now some EAC employees are working on a secondment basis at the TSO.

Upon introducing the new employment framework, they will have to decide whether to leave their position at the EAC and join the TSO or return.

Further delay is expected in launching a free electricity market; as the Cyprus Energy Regulating Authority has said, the trial period of the Transmission System will have to be repeated in October.

The testing period will have to be repeated as producers were not ready to participate in the first test run.

The second test run is scheduled to begin on 16 October.