Electricity

Implementation indicators

  • Unbundling

    Unbundling

    The legal basis for the unbundling and certification of the transmission system operator is still missing. Distribution system operators are not even legally unbundled yet.

  • Access to the system

    Access to the system

    Network access is ensured in a compliant manner. The Transparency Regulation and the Connection Codes are transposed and implemented to a large extent.

  • Wholesale market

    Wholesale market

    The wholesale market is deregulated except in Republika Srpska where the generation price continues to be regulated. The creation of a day-ahead market is pending adoption of a new state-level law. REMIT is transposed and started to be implemented.

  • Retail market

    Retail market

    The retail market is generally open and universal service supply applies to households and small customers only. Market dominance of the incumbent utilities on their respective geographic area still impedes competition development.

  • Regional integration

    Regional integration

    Cross-border capacities are allocated through SEE CAO except with Serbia where bilateral joint auctions apply. Balancing cooperation exists within the LFC block with Croatia and Slovenia, and bilaterally with Montenegro and Serbia. Market coupling initiatives have ceased.

State of compliance

The legal basis for electricity market reforms on the state level is still missing, as Bosnia and Herzegovina continues to fail adoption of a new state-level law transposing the Third Energy Package. The new Electricity Law of Republika Srpska, adopted in 2020, brings legal compliance in the unbundling of distribution and price deregulation in the electricity sector of this entity.

The transmission system is operated by two legal entities - the independent system operator NOS BIH and the transmission company Elektroprenos, owned by the two entities and controlled by their Governments, which are also owners of generation and supply utilities. In the absence of the necessary legal basis, the transmission operator cannot be unbundled and certified according to the Third Energy Package. The infringement cases of the Secretariat and the decisions of the Ministerial Council since 2016 failed to make a difference.

The provisions for legal unbundling of distribution are transposed in both entities. In Republika Srpska, the new Law transposed functional unbundling. Nevertheless, distribution is still legally and functionally bundled with supply in five companies of the state-owned holding Elektroprivreda Republike Srpske. In the Federation, the obligation for the compliance programme is missing. Two power utilities in the Federation operate as legally and functionally bundled undertakings for generation, distribution and supply. An infringement procedure against Bosnia and Herzegovina on this issue is open since 2018.

All three regulatory authorities implemented compliant conditions for network access. The Network Codes on connection are transposed by the state-level regulator SERC only in the domain of transmission which is regulated by this body – entity regulators have not yet transposed complementary provisions related to the generation and supply facilities. Publication of data on the ENTSO-E transparency platform is still not complete, and should be improved.

Generation prices are deregulated in the Federation. The new Law in Republika Srpska imposed a “sunset clause” on the regulated component in the electricity sold for universal supply over a four-year period starting in 2022.

The existing state-level law does not envisage any tasks and competences related to the set-up and functioning of a dayahead market. An efficient balancing market is operated by NOS BIH since 2016, covering both energy and reserve capacity. Improved balancing rules in force since September 2019 resulted in higher liquidity and lower prices. In the course of 2020, SERC adopted a set of acts transposing the REMIT Regulation for electricity, developed and implemented a corresponding reporting mechanism.

The retail market is formally open. Supplier switching is increasing, however, most consumers choose to have a new contract with their incumbent rather than an alternative supplier. Each incumbent supplier is still dominant in its respective area of operation. The market dominance of the bundled utilities on the territory of their (network) operation is among the reasons for the relatively low level of competition. Universal service is available only to households and small customers. All eligible customers are protected through a “last resort” supply service available for two months. Vulnerable customer programmes are enforced in both entities and the Brčko District.

Interconnection capacity on the borders with Montenegro and Croatia is allocated through regionally coordinated auctions at SEE CAO. The allocation mechanism on the border with non-SEE CAO member Serbia is bilaterally coordinated between the transmission operators, as are the intraday capacity auctions on all borders of Bosnia and Herzegovina. NOS BIH actively participates in cross-border balancing cooperation pursuant to
bilateral agreements with Serbia and Montenegro, and pursuant to the operational agreement of the SHB control block with the transmission system operators of Slovenia and Croatia.

Day-ahead market integration of Bosnia and Herzegovina is conditioned on the adoption of a new state-level law, and the initiatives for market coupling are not being pursued anymore. Other missing prerequisites include establishment of a local power exchange in Bosnia and Herzegovina and mutual recognition of trading licences.