The Price of Electricity for Businesses during 2015-2022 and Aspects of Market Liberalization

Open Data Albania is examining the process of liberalization of electricity market and selling price of electricity for Businesses consumers, based on the supply voltage, for the 2015-2022 period. More specifically, businesses are classified as:

• Customers supplied with 35 kilovolt voltage (kV),
• Customers supplied with 20/10/6 kilovolt voltage (kV),
• Customers supplied with 0.4 kilovolt voltage (kV),
• Bakery and Flour Production Factory business category with 20/10/6 kilovolt voltage
• and Bakery and Flour production at 0.4 kilovolt voltage.

Market liberalization or opening of the electricity market means creating conditions for consumers to have the opportunity to choose their electricity supplier, based on the offers that suit them.

The process of liberalization of the energy market has started in 2018 and the first to became part of the open market were Businesses consumers supplied with 35 kV voltage.

Before being included in the open market, for the 2015-2017 period, the price of electricity these entities paid was 9.5 Lek/kWh and the peak price was calculated at 10.93 Lek/kWh, not including transmission and distribution tariffs. The Peak Price is the tariff that is applied for the consumed electricity between April 1^s– October 31^st period from h. 19:00 to h23:00, as well as November 1^st – March 31^st from h.18:00 to h.22:00.

After 2017, the charges remained the same for the 0.4 and 20/10/6 kilovolts (kV) categories, but the price and supply for Customers with 35 kilovolts (kV) voltage supply was liberalized. Liberalization is the obligation to enter the free market, to be supplied with electricity not according to the Tariffs regulated by the ERE (Electricity Regulator Entity), through the state companies OSSHE and KESH.

Table: Electricity Sale Prices for businesses, ERE, 2015-2022, Lek/kWh
Source: ERE, Entity for the Regulation of Electricity
Comments and Analysis: OpenData.Al

Source: ERE, Entity for the Regulation of Electricity , Tariffs
Comments and Analysis: OpenData.Al

Whereas, after this period, with the inclusion of these businesses in the open market, electricity is provided by private suppliers, who apply prices depending on the price at which they buy energy on the stock exchange. There are currently 26 Private Suppliers, i.e companies licensed by the ERE for the service of supply and trading of electricity, operating in the free market.

Table: Private suppliers, licensed by the ERE, operating in theelectricity’s free market
Source: ERE, Entity for the Regulation of Electricity
Comments and Analysis: OpenData.Al

In case the Businesses that are supplied with 35 kV power, for specific reasons, can’t agree to receive power from these Private supplier companies, they will be supplied from the Final Opportunity Provider (FOP). FOP is a company licensed to carry out supplying activities, offering customers, for a limited period of time, supply service under regulated conditions. The latter is subject to prices set in advance, in accordance with the Methodology for determining the sale price of electricity by the FOP itself and approved by the ERE.

So, when Businesses have not entered into a Contract with one of the private Supplier companies, licensed by the ERE, they are under obligation to be supplied with electricity by the FOP, at prices approved by the ERE, for a period of 2 years. After that, if the Business has not yet entered into a contract with the Private Supplier, then its electricity is cut off.

FOP rates are variable every month. Since September, prices based on the FOP have increased and reached their peak in November 2021 with a price of 38.73 Lek/kWh. This additional costs for the business consumer is about 26.05 Lek per kWh.

Source: ERE, Entity for the Regulation of Electricity
Comments and Analysis: OpenData.Al

Meanwhile, in January 2022, Businesses that are supplied with 20 kV, 10 kV, 6kV and those with 0.4kV, should have entered the open market, but the process was postponed to June 2022. Currently, said businesses that are supplied with voltage 20/10 / 6 kV pay from 11 to 12.65 Lek/kWh, while businesses supplied with 0.4kV voltage pay from 14 Lek/kWh to 16.10 Lek/kWh.

At the same time, the price of electricity paid by bakeries and flour production businesses connected to the 20/10/6 kWh voltage varies from 7.10 Lek/kWh to 8.17 Lek/kWh, while those connected to the voltage 0.4kV pay from 7.6 to 8.74 Lek/kWh. These prices have not changed since 2015.

Other additional costs that aggravate these businesses are also the electricity transmission service tariff of 0.75 Lek/kWh, the distribution service tariff at  35 kV voltage level of 1.5 Lek/kWh, the distribution service tariff at the 20 kV voltage level of 3.9 Lek/kWh, as well as the average distribution service tariff of 4.79 Lek/kWh.

Source: ERE, Entity for the Regulation of Electricity
Comments and Analysis: OpenData.Al

The electricity market is the market where electricity is sold and bought directly, between market participants, on basis of bilateral contracts or the market organized through the platform for the sale and purchase of electricity on a day-to-day basis or within same day (intra day). Albania, as a contracting party to the Energy Community Treaty, must transpose and implement the Acquis Communautaire for Energy in national legislation, therefore the process of opening the electricity market is provided in law no. 43/2015 “On the Electricity Sector”.

Table: Final Electricity Tariff 2022, based on Supply Voltage
Source: ERE, Entity for the Regulation of Electricity
Comments and Analysis: OpenData.Al

Source: ERE, Entity for the Regulation of Electricity
Comments and Analysis: OpenData.Al

Value Added Tax applied on electricity in the country is 20%, a high tax compared to the EU average and some of the countries in the region. Likewise, the country is ranked among the costlier, compared to countries in the region and the EU, in terms of the price per kilowatt for both Family and Non-Family categories.

The data for this Article were extracted from the Energy Regulatory Entity (ERE) and the Electricity Distribution Operator (OSHEE).

Download excel:The Price of Electricity for Businesses during 2015-2022 and Aspects of Market Liberalization
Comments and Analysis: Open Data Albania
Translated by: Rezarta Cushaj