Energy Community Secretariat Needed Reforms in Electricity High-Level Forum on Security of Supply in Kosovo Andreas Pointvogl, Energy Community Secretariat High-Level Forum on Security of Supply in Kosovo Prishtina, 1 March 2016

Energy Community Secretariat 2 The Kosovan Challenge in Electricity The only way forward for Kosovo to reach secure, sustainable and fair electricity is: To provide a national level-playing field To form part of the regional market  In terms of adequacy  Showcase ability to cooperate  Attract investment  Allow market forces to unfold (liquidity) To stronger commit to Western Balkan 6 process High-Level Forum on Security of Supply in Kosovo

Energy Community Secretariat 3 Current Performance of Kosovo in WB6 Process

Energy Community Secretariat National reforms are necessary and sufficient condition for closer integration in all dimensions Ensure compliance with the Energy Community acquis by adopting and implementing a Third Energy Package compliant set of laws  Provide legal certainty for cooperation partners, investors, operators  Institutional independence Cleaning up of neighbouring laws Timely developing of complementary acts Phasing out of distorting forms of price regulation, cross-subsidisation, or other non-transparent price formation 4 No Good Security of Supply without Good Governance High-Level Forum on Security of Supply in Kosovo

Energy Community Secretariat Energy security and sustainability is a result of a functioning sector For Kosovo, the only option to reach a sufficient level of supply security is the integration into regional and European markets  Regional Balancing markets cushioning the lack of balancing reserves  Regional adequacy assessments are more important for Kosovo than for many other European countries  Pan-European market coupling to bring in the needed liquidity to allow for a competitive price formation in the most important market segment Key message: first necessity is to make Kosovo‘s institutions and rules fit for further integration in all forms: day-ahead market coupling, closer balancing cooperation, or closer regulatory cooperation 5High-Level Forum on Security of Supply in Kosovo Security of Supply as Individual Player in the Region

Energy Community Secretariat Open Issues on the way to foster Security of Supply  Issue licenses to all suppliers whose applications are pending  Eliminate all forms of inefficient price formation Phase out regulation of generation & end user prices, cross- subsidies Establish tariff systems allowing for a fair cost recovery for entities providing public services  Require KOSTT to develop a fair balancing regime  Promote transparency in all market segments  Start discussions of declaring groups of vulnerable customers and support schemes to substitute price regulation  Adopt all decision needed to set the ground for TSO unbundling 6High-Level Forum on Security of Supply in Kosovo Key to Success is to first Resolve Open Issues at Home Arben Llapashtica

Energy Community Secretariat 7 Thank you for your attention! High-Level Forum on Security of Supply in Kosovo