DEVELOPMENT OF REGIONAL ENERGY MARKETS IN EUROPE …
Transcript of DEVELOPMENT OF REGIONAL ENERGY MARKETS IN EUROPE …
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I. Executive Summary
Supporting Energy Law Reform in North
Macedonia
On January 30, the Government of North Macedonia
signed nine contracts with investors for construction
of 11 photovoltaic (PV) plants with 35 megawatts
(MW) of installed capacity on state-owned land in
two municipalities, Makedonski Brod and Sveti
Nikole. PV plant construction is expected to start in
the coming months and is projected to generate over
80 gigawatt-hours (GWh) of electricity annually.
DREM’s work on the new Energy Law and all relevant
bylaws enabled the launch and completion of the
tender for PVs on state land. Investors paid the
government 2.7 million euros for the right to use this
for construction of the plants.
On January 31, the Ministry of Economy (MoEcon)
held an electronic auction for 27 MW of PVs on
private land. A total of 41 bids were submitted from
private investors, and bidders that complied with the
tender criteria were invited to participate in the
electronic auction. DREM drafted the new Energy
Law and all the relevant bylaws that made it possible
for the tender for PVs on private land to be launched
and processed.
North Macedonia’s Minister of Economy
acknowledged USAID’s support in developing the
Energy Law as well as the entire secondary legislation
that created necessary conditions to implement the
premiums as a new renewable energy support
mechanism. The bidding procedure, a change from
negative to positive auctioning, resulted in 2.7 million
euros for the government and estimated premiums of
3-6 euros/MWh (compared to 15 euro/MWh from
negative auctions). This is a great success, since the
costs for premiums are significantly lower than
projected and will not burden the state budget.
Next month, DREM expects finalization of the
amendments to the Energy Law and finalization of the
Energy Regulatory Commission (ERC) Rules for resolving
objections and settling disputes.
Ukraine Transmission Substations Modernization
Feasibility Study
At the end of January, Ukrenergo approved seven of
12 TEOs (financial and economic assessment) and
plans to submit them to the state expert in February.
Ukrenergo reviewed the remaining five TEOs, and
DREM agreed to incorporate Ukrenergro’s 700
comments over the course of February. DREM
anticipates that once comments are incorporated,
Ukrenergo will provide timely approval because they
are under pressure from EBRD to advance matters.
Next month DREM expects the finalization of 7 of 12
TEOs followed by their submission to the state expert.
Albania OSHEE Utility Performance
Improvement
DEVELOPMENT OF REGIONAL ENERGY
MARKETS IN EUROPE AND EURASIA
MONTHLY REPORT – JANUARY 2020
Photo 1: Field verification of zero bills in Vlora region
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DREM conducted extensive hands-on support
activities, monitoring customer disconnection and
inspection operations in the field and conducting
performance appraisal meetings with regional
employees in all three OSHEE regions of Shkodra,
Durres and Vlora.
On January 1, the unbundling of the OSHEE structure
took effect pursuant to Albania’s law on the energy
sector. There are now three unbundled entities
operating under the OSHEE umbrella: (i) The
Distribution System Operator, which is the only one
in Albania, is in charge of operating, maintenance,
planning and developing the distribution network;
offering access to network users; and managing meter
data, meter reading, meter dismantlement and
replacement, and all other activities related to
meters, including disconnecting or reconnecting
debtors based on supplier requests. (ii) The Universal
Service Supplier, which is licensed as a public supplier,
is responsible for supplying the regulated market. (iii)
The Free Market Supplier is a licensed trader and
supplier for unregulated customers.
In addition, implementation began of the new rule and
methodology to calculate economic damages caused
by illegal interference to the electricity network by
customers. With support from DREM, the regulation
was proposed in mid-2019 by OSHEE and approved
by the Energy Regulatory Authority (ERE). The
regulation will charge customers who have stolen
electricity to reclaim losses calculated in kWh for the
previous six months. It will be charged in Albanian Lek
based on the average price. The level of reclaim losses
is determined by kWh based on customer classes.
Implementation of this regulation will contribute
greatly to DREM’s loss reduction efforts.
Next month, DREM will replicate loss reduction activities
in the Vlora and Durres region, conducting skills
assessments of all mid-level management and field
employees and operational due diligence, including
reading and disconnection process, network conditions,
feeder meters, losses, sales and collection, for the
distribution network.
Serbia Energy Efficiency Activity
DREM is seeing significant increase in gas savings
within its partnering district heating companies
(DHC) in Nis and Cacak. After reconstruction of two
substations (Ratko Jovic and Majakovski) and
installation of SCADA for 25 DHC substations in
each DHC respectively, monitoring efforts showed
the following progress in January:
• 35% gas savings for the 25 Cacak substations
• 41% gas savings at Ratko Jovic and 10%
savings at Majakovski (total gas savings for
DHC Nis = 25% for combined Ratko Jovic
and Majakovski).
In addition, this month, DREM completed
implementation work for DHC Pancevo. This
included installation of roof insulation and fire system
modifications to comply with fire inspector
requirements. DREM expects the plant to be
operational beginning in February.
Next month, DREM will continue impact evaluation for
DHC Cacak and Nis, including site visits to monitor system
performance. DHC Pancevo – Commissioning and testing
is also planned for February. DREM plans to monitor each
DHC over the course of the heating season.
Energy Management System (EMS)
To encourage further engagement after the holiday
period, DREM re-released the request for
expressions of interest in all Western Balkan
countries. DREM successfully received 55 EOIs and
25 data sheets, primarily from Albania.
Next month, DREM will conduct a second promotional
tour (Serbia, North Macedonia, Kosovo, and Bosnia) to
further promote the EMS.
Kosovo KEK Procurement
Risk Insurance Survey
KEK incorporated all the DREM International
Advisor’s recommendations into its risk insurance
survey tender dossier. In the second week of January,
KEK conducted a closed tender inviting economic
operators for competitive negotiations without
publication of the contract notice. Negotiations took
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place on January 22, and KEK awarded the tender to
a consortium comprising local firm ABC Appraisals,
Marsh EOOD and Engineering Service Sofia
(ESS). ABC Appraisals will manage administrative
issues in Kosovo, Marsh EOOD will provide reports
on KEK’s potential exposure to loss, and ESS will
evaluate KEK’s main assets. Evaluations will be
included in the tender dossier required by CG for
purchase of the insurance policies.
Solar Assessment Tender
On January 27, after a two-week delay caused by
KEK’s absent tender Project Manager and Director of
Corporate Services, KEK kickstarted tender
implementation.
Next month, DREM will continue its ongoing procurement
support to KEK and support contracting for the Risk
Insurance Survey.
Modernization Program for ESM (North
Macedonia)
After several months of inquiries and an in-country
visit by USAID and DREM leadership in December
2019 to assess their commitment, Elektrani na
Severna Makedonija (ESM) began submitting the
requested financial data in January. DREM reviewed
this initial data and asked clarifying questions.
However, questions remain unanswered and there is
still documentation needed.
In February, DREM will continue to request the
information during February until it is received. Once ESM
provides the data, DREM will complete the financial
model and update the gap analysis report. DREM is
undergoing a budget realignment for this task.
Albania-Kosovo Market Coupling
DREM launched the Market Coupling activity with
coordination meetings and stakeholder engagement
in Albania and Kosovo. The team met with key
stakeholders such as USAID, the Energy Community
Secretariat, OSHEE and KOSTT, who showed great
enthusiasm to re-engage and build on previous
market coupling efforts. These stakeholders agreed
that next steps will include DREM’s technical
assistance to establish APEX (the precondition for
market coupling) as well as a study tour to already-
coupled markets in the region (Croatia and Slovenia)
to familiarize key players with processes and daily
operations of power exchange and market coupling.
Lastly, participants agreed that DREM will train the
key players using simulations of real trading on APEX
in both Albania and Kosovo.
Northern Kosovo Electricity Supply and
Distribution Challenge
DREM received approval from the Kosovo Mission
Director to initiate the activity, upon which USAID
and DREM held a kick-off planning call to discuss
goals, risks and strategy for the first in-country
engagement planned for March 2020.
Next month, DREM will begin procuring local and
international resources in preparation for the trip, during
which team members will assess the question of who
should bear the cost of energy supplied to northern Kosovo
and related issues.
Georgia Hydro Implementation
Last quarter, DREM received USAID approval to
move forward with two priority projects – the
Kvesheti and Mieta HPPs – with the goal of advancing
both from their current pre-feasibility stage through
to commercial close. In January, DREM secured
project resources and refined the scope; the project
anticipates deployment for Phase I: Fatal Flaw
Assessment in March 2020.
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III. Summary of Task Progress
ACTIVITY A. ENERGY SECTOR REFORM
Task A1. Supporting Energy Law
Reform in North Macedonia
Activity: Completing the Secondary
Legislation Foreseen by the Energy Law
DREM continued its support to the Government
of North Macedonia (GoNM) and the Ministry of
Economy (MoEcon) in drafting the remaining
secondary legislation prescribed by the 2018
Energy Law. The following were drafted:
“Decree on the terms and criteria for
declaring an electricity crisis” and
“Decree on the terms and criteria for
declaring a gas crisis.” The objective of these
decrees is to enable security of supply (with the
appropriate type of energy) and energy system
stability. The decrees lay out the terms and
criteria for determining the method of supply of
natural gas and electricity in cases of natural
disasters or other significant supply disruptions.
It also includes actions to be taken in case of
crisis and the rights and obligations for licensed
entities that conduct energy activity. Given the
intent to align with the European Union (EU), the
decrees include a procedure for notifying the
Energy Community (EnC) on the actions taken
and steps for cooperation with gas and electricity
transmission system operators from neighboring
countries.
DREM updated the draft rulebook on
conducting exams for handlers of
electrical appliances and facilities. Revisions
include clearer provisions on the composition
and mandate of the Exam Commission, type of
questions and point allocation in theoretical and
practical parts of the exam, and rights of the
candidates. DREM shared the updates with
MoEcon, but several components require further
revision before adoption.
Activity: Support for Implementation of the
Energy Legislation
In a nationwide event on January 30, the GoNM
signed nine contracts with investors for
construction of 11 PV plants with 35 MW of
installed capacity on state-owned land in
Makedonski Brod and Sveti Nikole municipalities.
PV plant construction is expected to start in the
coming months and projected to generate over
80 GWh of electricity annually. DREM’s work on
the new Energy Law and all relevant bylaws
enabled the launch and completion of the tender
for PVs on state land. The Minister of Economy,
Kreshnik Bekteshi, acknowledged USAID-
DREM’s support in developing the Energy Law
and the entire secondary legislation that created
Photo 2: Minister of Economy awards contract to PV investor
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the enabling environment for implementation of
the premiums as a new renewable energy
support mechanism.
The bidding procedure, a change from negative
to positive auctioning, generated 2.7 million
euros in GoNM revenue for eight of the 11 plots.
The remaining three plots, of 1MW capacity
each, will receive estimated premiums of 3 to 6
euro/MWh. Given that premiums from the
negative (reverse) auction started at 15
euro/MWh, this is a great success. Costs for
premiums are significantly lower than projected
and will not burden the state budget.
On January 31, MoEcon conducted a negative e-
auction for the PVs with 27MW installed capacity
on privately owned land. During this auction, the
lowest premium requested was 13 euro/MWh.
Once this procedure is completed (after the
deadlines for appeals), MoEcon will sign a
contract with the most favorable investors.
DREM worked on finalizing amendments to the
Energy Law. In addition to amendments on
penalty provisions and transposition of the
Regulation on Wholesale Energy Market
Integrity and Transparency (REMIT), these
changes relate to new requirements by the EnC.
For example, the National Renewable Energy
Action Plan was replaced by the National Plan for
Energy and Climate. DREM will finalize the text
of the Draft Law for Amendments and
Addendums to the Energy Law and will submit it
to MoEcon for further processing in early
February. Adoption of this law is anticipated after
early elections and constitution of the new
parliament.
DREM met with EVN Macedonia (EVN), the
country’s biggest supplier of electricity to
households. EVN has been approached by
citizens and small consumers to conclude
prosumer contracts. DREM identified several
issues related to calculating spent/supplied
electricity, VAT and invoicing, so the team will
arrange additional meetings with the Ministry of
Finance to resolve them in order to facilitate the
prosumers concept implementation.
Activity: Support in finalization of the Energy
Efficiency (EE) Law and Drafting of
Secondary Legislation
The Energy Efficiency Law went through the
parliamentary procedure for adoption; however,
opposition members of the Parliament and
MoEcon submitted 25 amendments prior to
adoption. DREM held several working sessions
with MoEcon staff to draft some of the
amendments to make the provisions clearer and
more precise, especially those related to
connecting to and switching off the district
heating network. The second reading of the draft
was finalized on January 31 and the plenary
sessions for adoption of the law is scheduled for
February 4.
Next Steps – February 2020
• Finalization of the amendments to the Energy
Law
• Finalization of the Energy Regulatory
Commission (ERC) Rules for resolving
objections and settling disputes
• Finalization of the Decrees on gas and
electricity crises
• Finalization of the Rulebook on the manner
of conducting the exam for handlers of
electrical appliances and facilities
• Work with MoEcon and the Energy Agency
on the study and recommendations related
to guarantees of origin (green certificates)
• Work with MoEcon and other relevant
authorities to resolve the open issues related
to prosumers
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Task A2. Albania Kosovo Market
Coupling
In January, DREM launched its Market Coupling
activity with coordination meetings and
stakeholder engagement in Albania and Kosovo.
The team met with key stakeholders such as
USAID, the Energy Community Secretariat,
OSHEE and KOSTT, who showed great
enthusiasm to re-engage and build on previous
market coupling efforts. These stakeholders
agreed that next steps will include DREM’s
technical assistance to establish APEX (the
precondition for market coupling) as well as a
study tour to already-coupled markets in the
region (Croatia and Slovenia) to familiarize key
players with processes and daily operations of
power exchange and market coupling. Lastly,
participants agreed that DREM will train the key
players using simulations of real trading on APEX
in both Albania and Kosovo.
In addition to the above, the Special Commission
requested DREM’s support on preparation of the
draft Shareholder Agreement. OST requested
that DREM support development of general
conditions for the Shareholders Agreement for
inclusion in the bidding documentation.
Next Steps – February 2020
• Respond to specific requests for support by
APEX establishment Commission and
related stakeholders.
• D-REM MC Team members will organize
follow up meetings with stakeholders and
WG members in Prishtina, Kosovo Feb 5-7,
2020.
• Continue process of updating the Joint
Action Plan.
• Initiate capacity building activities, by
initiating planning for the Croatia-Slovenia
Power Exchange Study Tour scheduled for
March 2020.
ACTIVITY B. ENERGY EFFICIENCY, UTILITY MANAGEMENT, AND
ENVIRONMENTAL RESOURCE MANAGEMENT
Task B1. Ukraine Transmission
Substation Modernization
Feasibility Study
At the end of January, Ukrenergo approved
seven of 12 TEOs and plans to submit them in
February. Ukrenergo will review the remaining
five TEOs, and DREM agreed to incorporate
Ukrenergro’s 700 comments over the course of
February. DREM anticipates that once comments
are incorporated, Ukrenergo will provide timely
approval because they are under pressure from
European Bank of Reconstruction and
Development (EBRD) to advance matters.
Ukrenergro’s reasoning behind the separate
submission of the TEOs is unknown. However,
costs for submission to the state expert have
increased beyond what was originally budgeted.
A brief description of the TEOs follows:
TEOs. On June 5, DREM submitted final
versions of its TEOs for the 12 substations on
schedule (Component C). These draft TEOs
cover the 12 substations targeted for
rehabilitation: SS 330 kV Myrgorod, SS 330 kV
Tryhaty, SS 330 kV Mykolaivska, SS 330 kV
Lisova, SS 750 kV Zahidnoukrainska, SS 330 kV
Novovolynsk, SS 400 kV Mukacheve, SS 330 kV
Yavoriv, SS 330 kV Kupyansk, SS 750 kV
Donbaska, SS 330 kV Lviv Pivdenna, and SS 330
kV Grabiv.
In July, Ukrenergo submitted three sets of
comments on the TEOs covering all substations.
In September, it sent additional comments for
five substations. DREM reviewed these
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comments and submitted the final TEOs to
Ukrenergo for approval in October 2019.
Task B2. Performance
Improvements for the National
Electric Distribution Network in
Albania
Improved Reading and Billing – Shkodra,
Durres and Vlora
DREM reviewed the performance of readers
from the Metering and Billing Department for the
December/January reading process and assessed
reading errors and quality of pictures provided.
In the region of Shkodra, 55 readers received
disciplinary warnings. In Durres, DREM met with
readers’ groups in all nine zones and discussed
the results of poor pictures taken during
December. Three readers received warnings and
targets were set for photo control. A minimum
of 70% of read household customers must have
visible picture quality, while 98% of commercial
customers must have visible pictures.
In cooperation with the Regional Commercial
Manager and the Metering and Billing
Department, DREM trained readers in all three
regions to improve their efficiency and increase
their reading performance. In Shkodra, readers
were trained on using their hand-held units,
identifying meter interferences and reporting
errors. In Durres and Vlora, training is provided
as part of the skills assessment exercise, which
will be followed by tailored trainings for readers
and electricians.
Revisit/Restructure Reading – Shkodra,
Durres and Vlora
In January, the reading schedule was planned for
one day too few, from January 23 to 30 instead
of January 31. This was an oversight by OSHEE
Headquarters (HQ), which corrected the issue
but only for a few regions.
DREM monitored meter reading activities across
the three regions. Of the 56 readers in Vlora, 19
(34%) were identified as underperforming,
meaning they have more than 20% incorrect
readings and poor-quality meter photos. All
readers have been spot-checked, warned of their
poor performance and informed of the
appropriate execution of their job
responsibilities.
Identify Zero Bills – Shkodra, Durres and
Vlora
Based on DREM’s zero bills analysis, the number
of bills with zero consumption decreased in
January compared to December 2019.
Shkodra - 113,511 total customers, among whom
zero bills decreased from 35,683 in December to
35,385 in January. Zone 1, Zone 3 and Zone 4
made an improvement, reducing zero bills by
approximately 1,000.
Photo 3: Monitoring LCRD activities in Vlora
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Durres - 169,497 total customers, among whom
zero bills decreased from 55,763 in December to
51,950 in January. This is a direct result of DREM
monitoring of the reading process.
Vlora - 83,086 total customers, among whom
zero bills decreased from 28,582 in December to
20,095 in January. The substantial zero bill
decrease was because of customers returning
home from the holiday season and proper
supervision of the reading process.
Improve Revenue Protection and Control /
Institutionalize Operational Audit and
Revenue Protection Units/Strengthen
Internal Controls
In January, OSHEE announced the fifth round of
recruitment for vacant positions of controllers in
the Loss Control & Recovery Department
(LCRD). DREM was asked to assist the HR
department by testing and interviewing potential
candidates.
In January, the LCRD conducted 1,119
inspections across Albania, 746 in the three
regions where DREM engages. LCRD discovered
only 10 cases of electricity theft, of which seven
were located in DREM regions, recovering over
21,000 kWh.
In Vlora, DREM detected an electricity theft case
that had not been reported by the meter reader.
DREM recommended that the zonal coordinator
be given an immediate written warning. The case
was handed over to the LCRD team for
intervention and sent to local police for
prosecution.
In Shkodra, 35 electricity theft cases were found
by zone inspection teams and reported to law
enforcement. Most of the cases came as a result
of increased night inspections requested by
DREM.
In Zone 3, among dozens of electricity theft
cases, there were two interesting cases
discovered during night inspections. In one case
a household customer, whose meter was
relocated outside his premises in a meter box,
was found stealing electricity by connecting
through a hidden underground cable and
bypassing the meter directly to the transformer.
In a second case, a household customer in an
apartment building had hidden a cable and
connected to steal from his neighbor. Both cases
have been reported to police.
Electricity Losses (Refer to Annex A for
graphics)
Shkodra
Losses remained at the same level as January
2019 but improved slightly from December
2019, even though energy consumption
increased by 6.5% from 65 GWh to 70 GWh.
The low rate of improvement is due to 11,000
verification cases that were not reflected in the
billing system, since they had only signed reports
from readers with no picture evidence.
Durres
In Durres, January 2020 losses decreased slightly
compared to January 2019 but increased
compared to previous months’ losses. These
slow improvements were expected due to
weather conditions and the earthquake in
Durres.
Vlora
In Vlora, losses improved by almost 2%
compared to January 2019. Despite the 10%
increase in electricity usage from December
Photo 4: DREM monitoring meter inspection in Vlora
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2019 to January 2020, losses continue to be
lower than in previous months.
Performance Management System
Shkodra
Due to poor performance and December’s
increase in commercial losses, DREM held a
performance appraisal meeting with zone
coordinators. The coordinators provided
insufficient justification for failure to meet key
performance indicators, so DREM
recommended that management take disciplinary
measures. A team leader in Zone 2, who was
politically connected and discouraged other
employees to improve, was terminated. This was
a significant step forward for OSHEE.
Durres
DREM met with readers’ groups in all nine zones
and discussed the results of poor pictures taken
during December. Three readers received
warnings and targets were set for photo control.
A minimum of 70% of read household customers
must have visible picture quality, while 98% of
commercial customers must have visible
pictures.
Strict Disconnections
Shkodra
Of the 8,798 customers with outstanding debt,
1,428 customers were disconnected. As a result,
the disconnection efficiency increased from 10%
to 16% from December 2019 to January 2020.
Durres
Of the 7,169 customers planned for
disconnection, 744 have been disconnected,
bringing the disconnection efficiency to 10%.
Vlora
Of the 3,744 customers planned for
disconnection, only 755 have been disconnected.
In all three regions there is a need to significantly
increase disconnection efficiency, despite
indication that there are not enough electricians
to engage both disconnections and fault clearing
activities, which are at their peak during this time
of the year.
Update Infrastructure Data
Shkodra
The mapping and data collection have been
ongoing since June 2018. The overall assessment
for OSHEE is that this effort is still behind
schedule. The reported percentage completed
varies by region and by feeder within regions. In
Shkodra, the completion rate reported remains
at 70%. It was agreed with OSHEE HQ that until
March 15, Shkodra will submit updated single
pole diagrams for all its feeders in order to be
reflected in the system.
Durres
DREM discovered that the reported losses on
several feeders was not caused by commercial
losses, but by incorrect customer enumeration
or mapping to reflect the actual distribution
network. The lack of customer enumeration of
billing data in line with the actual network
mapping in the field deeply affects the ability to
accurately account for losses on a feeder basis.
DREM has raised this issue with the regional
director and started the process of updating each
feeder in the billing system.
Photo 5: Reporting theft cases during night inspections in Zone
3, Shkodra
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DREM held a working meeting with the zone
coordinator for Durres/Plazh and discussed zone
performance. During the visit, DREM found a
significant number of customers with incorrect
enumeration to the distribution transformers. A
detailed list of customers has been prepared and
submitted to the relevant department at OSHEE
HQ for data adjustment.
Improve System Access
The OSHEE billing department introduced a
workforce management module in all regions to
monitor operations and outstanding
assignments. In each region, three to four
regional employees are assigned to monitor
operations and update the workforce
management module accordingly.
Reinforce the Legal Function
Shkodra
Upon DREM instruction, Shkodra regional legal
officers submitted requests to the prosecutor’s
office to understand the status of electricity theft
cases reported to the police during 2019 in the
region. The prosecutor’s office has not yet
responded to the request.
Improve Metering Infrastructure
Only seven Distribution Transformers (DT) that
were unlocked and accessible to the public have
been locked.
Eight balance meters have been installed in DTs
to measure the total amount of electricity
distributed through those DTs.
Durres
DREM field visits found that significant
investments have been made to the network in
Durres; however, metering issues remain. For
example, meters or functional DT meters are
not available, and customer meters were deep
within customer premises and inaccessible to
OSHEE employees. DREM requested inspection
of all DTs to obtain a clear report on the number
that are metered and how many have functioning
meters.
Relocate Meter Points / Install Balance
Metering
Shkodra
In December, 478 meters were relocated to the
border of customer premises, the majority
relocated in Zone 4.
In January, 123 meters were relocated to sites
with network investments but where meters
were not relocated from customer premises.
New electronic meters replaced 132 mechanical
meters in collective boxes, and meter boxes
were cleaned and sorted to avoid illegal
connections.
DREM asked to immediately relocate meter
points to Feeder No. 13 in Shkodra’s Zone 3,
which recorded 85% losses in January 2019 with
only 30 customers in four distribution
transformers. The relocation process was
completed in April and losses decreased
significantly: in January 2020, this feeder
recorded only 35% losses.
DREM inspected ongoing work in Fushe Kruje
Zone, Feeder Borazine, No. 14. This feeder has
Photo 6: Collective meter box after clean-up and replacement
of meters.
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2,300 customers and 61 distribution
transformers, and its cumulative losses for 2019
were 61%. To improve accuracy, OSHEE planned
to replace old mechanical meters and install new
electronic meters. DREM identified this as an
opportunity to initiate meter relocation, and
agreed with regional management that all meters
on the feeders will be relocated and lines
changed. In January, 210 meters in Durres were
relocated; DREM will track the relocation
progress until project close.
Cable Detection
DREM provided a draft budget justification and
estimation for cable detection devices. With the
establishment of the new LCRD, OSHEE now
needs to equip the inspection teams with proper
tools, including specialized equipment to detect
illegal cable connections.
Next Steps – February 2020
• Conduct skills assessment of all mid-level
management and field employees in Durres
and Vlora: December 2019 to July 2020
• Implement changes in mid-level management
and feeder teams in Durres and Vlora based
on skills assessment and quarterly
performance results: March to July 2020
• Ensure alignment of positions and employee
assignment based on the new organization
structure, which mirrors the distribution
network in Durres and Vlora: December to
March 2020
• Conduct operational due diligence, including
reading and disconnection process, network
conditions, feeder meters, losses, sales and
collection, for the distribution network in
Durres and Vlora: December to January
2020
• Revise reading and billing process by
adjusting the reading graphic to be able to
reach the reading target established for
urban, semi-urban, and rural areas in Durres
and Vlora: February to April 2020
• Establish a performance management system
in Durres and Vlora, introduce new job
descriptions, review KPIs and assign targets
for each feeder team and zone, and continue
conducting monthly and quarterly
performance appraisals for all three regions:
January to December 2020
• Meet municipal and law enforcement
representatives in Durres and Vlora to
inform them about DREM advisor’s
engagement and solicit their support for
DREM initiatives: January to April 2020
• Commence relocation of customer meters
to make them accessible for OSHEE
employees in Durres and Vlora: March to
August 2020
• Implement community outreach activities in
Shkodra by meeting with municipal
representatives and communities with
feuding difficulties (those who refuse to pay
for electricity) and by meeting in locations
where OSHEE employees have no direct
access to customer meters: late March to
April 2020
• Continue relocation of electricity meters at
the border of customer premises in all areas
of Shkodra where OSHEE implemented
network investments and in small feeders
with high losses: March to June 2020
• Conduct trainings for field employees,
readers and electricians on meter inspection
for electricity theft: March to November
2020
• Complete staffing of regional units of Loss
Control & Recovery Department in Shkodra,
Durres and Vlora: December to March 2020
• Train regional units of Loss Control &
Recovery Department on work procedures
and meter inspection processes: April to
May 2020
• Work on approval and implementation of
calculation and registration of reclaim losses,
to include strengthening of regional legal
officers: March to June 2020
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Task B3. Serbia Energy Efficiency Activity (SEEA)
DREM is seeing significant increase in gas savings
within its partnering district heating companies
(DHC) in Nis and Cacak. After reconstruction of
two substations (Ratko Jovic and Majakovski) and
installation of SCADA for 25 DHC substations in
each DHC respectively, monitoring efforts
showed the following progress in January:
• 35% gas savings for the 25 Cacak
substations
• 41% gas savings at Ratko Jovic and 10%
savings at Majakovski (total gas savings
for DHC is 25% for combined Ratko
Jovic and Majakovski).
DREM worked closely with Cacak Technical
Director and staff to maximize use of the
SCADA through better scheduling (optimum
start/stop). DREM implemented a scheduling
program at substation # 1560 which serves a
school building to reduce heating during holiday
periods (no occupancy) and to turn heat on 1
hour before school opening and turn off after the
school day. During January, there was a
reduction in heat supply during the first week in
January (during the holiday period), but more
importantly during the Jan 6-20 period which
reflects implementation of the daily scheduling
program. Even though the temperature during
from Jan 6-20 was colder (higher degree days),
the level of gas consumption did not increase at
the same rate as the increase in degree days,
which confirms that DHC Cacak is taking
maximum advantage of this USAID project.
In addition, this month, DREM completed
implementation work for DHC Pancevo. This
included installation of roof insulation and fire
system modifications to comply with fire
inspector requirements. DREM expects the
plant to be operational beginning in February.
Next Steps – February 2020
DREM will continue impact evaluation for DHC
Cacak and Nis, including site visits to monitor
system performance. DHC Pancevo –
Commissioning and testing is also planned for
February. DREM plans to monitor each DHC
over the course of the heating season.
Task B4. Modernization Program
for ESM (North Macedonia)
After several months of inquiries and an in-
country visit by USAID and DREM leadership in
December 2019 to assess commitment, Elektrani
na Severna Makedonija (ESM) began submitting
the requested financial data in January. DREM
reviewed this initial data and asked additional
clarifying questions. However, questions remain
unanswered and documentation is still needed.
DREM will continue to request the information
during February until it is received. Once ESM
provides the data, DREM will be able to
complete the financial model and update the gap
analysis report. DREM is undergoing a budget
realignment for this task.
Task B5. Energy Management
Systems (EMS) Demonstration
(Western Balkans)
After December’s in-country promotional tour
for EMS and release of the Request for
Expressions of Interest, DREM re-released the
request to further increase engagement on the
EMS Partnership Opportunity. Through this
effort, in total, DREM solicited the interest of 55
companies, individuals, residential buildings, etc.,
and received 25 data sheets. From these, DREM
identified 15 high-potential EMS beneficiaries
after review of energy consumption, annual
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energy costs and willingness to cost share for
installation of the EMS. DREM then contacted
them to confirm interest and coordinate a visit
during the second EMS promotional tour.
Majority of the high-potential beneficiaries came
from Albania.
In January, TIMEL met with Honeywell in Serbia
to discuss the EMS implementation strategy and
ensure understanding of Honeywell’s technical
solutions being offered through the partnership.
Given Honeywell’s time and capacity constraints,
it was agreed that TIMEL will serve as an
intermediary between Honeywell and potential
EMS beneficiaries by “selling” the system and
developing the preliminary technical design in
North Macedonia, Kosovo and Albania.
Honeywell will remain responsible for Serbia and
Bosnia, where it has an existing pipeline of
customers.
Next Steps – February 2020
DREM is planning its second Western Balkan
promotional tour for February and will conduct
roundtable events in Kosovo, North Macedonia,
Bosnia and Serbia. DREM hopes to further excite
interest and spread the word on this opportunity
through this tour.
Task B6. Procurement Assistance
for KEK (Kosovo)
Excavator Tender
The only economic operator to bid for the
excavator tender, Fugo was disqualified for being
technically unresponsive. As a result, the
operator filed a complaint to KEK and asked for
a review of its decision. On January 3, KEK
informed the operator that its decision remained
unaltered, so the operator filed the same
complaint to the Procurement Review Body
(PRB). Procedures to republish the tender are at
a standstill until PRB decides on the merits of the
complaint. DREM monitored the process and
reviewed the documents that KEK Procurement
was asked to submit to PRB.
Solar Assessment Tender
On January 27, after a two-week delay, KEK
kickstarted the tender process. The delay was
caused by the absence of the Project Manager for
the tender and the Director of Corporate
Services at KEK. As requested by KEK, DREM
participated in the first meeting and the
International Advisor is actively supporting the
Project Manager.
Busbar Tender
The tender was annulled on January 10, as the
evaluation commission was unable to technically
or financially compare the two bids it received.
The procurement legislation is largely silent on
how negotiations should be conducted in this
procedure, except for general principles.
Consequently, the negotiations were conducted
in line with KEK Procurement’s usual practices,
whose shortcomings include a lengthy procedure
and limited expertise of the technical staff of the
evaluation committee. As a result, any decision
might have been the subject of a complaint to the
PRB, thereby extending the process even
further. As soon as the complaint deadline
passed, DREM met with the representatives
from Kosovo B and discussed next steps. KEK
management has made it clear that they intend
to use the same procedure again, with the same
operators. However, DREM proposed further
amendments to the new Tender Dossier
regarding the nature of references that the
economic operators will be required to provide.
After Kosovo B asked to move ahead with the
purchase of the Busbars, DREM wrote to
Procurement requesting that they proceed with
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next steps immediately and not cause further
delays to the procurement procedure.
Risk Insurance Survey
On January 22, KEK negotiated and awarded the
tender to a consortium comprised of local firm
ABC Appraisals, Marsh EOOD and Engineering
Service Sofia (ESS). The local firm will handle
administrative issues in Kosovo, Marsh EOOD
will provide reports on KEK’s potential exposure
to loss, and ESS will evaluate KEK’s main assets.
The evaluations will be included in the tender
dossier required by Contour Global (CG) for the
purchase of the insurance policies.
DREM played an important role in this effort.
DREM’s International Advisor provided
recommendations to the Director of Corporate
Services, specifically to increase the financial
means and other legal content of the tender
dossier. In the second week of January, KEK
conducted a closed process sending invitations
to economic operators for competitive
negotiations without the publication of the
contract notice. All the International Advisor’s
recommendations were incorporated in the final
dossier, including increasing the financial means
to encourage a higher quality of the team
proposed to implement the tender.
KEK Procurement Manual
The International Advisor has shared an outline
of the Procurement Manual, which was reviewed
and approved by Tetra Tech management.
DREM has started compilation of the
procurement manual.
Task B7. Approach to Deal with
the Northern Kosovo Electricity
Supply and Distribution Challenge
In January, DREM received Mission Director
approval to begin work under this task and
coordinated a kick-off call with USAID and the
Mission to discuss project goals, risks and the
way forward.
Next Steps – February 2020
In February, DREM will onboard both local and
international project resources to plan an in-
country trip for March 2020. The trip will assess
the options available to determine who should
bear the cost of energy supplied to northern
Kosovo and related issues. This assessment is
particularly important due to the impending
accession of KOSTT to ENTSO-E, which means
that KOSTT will be fully responsible for its
control area (Kosovo), including the cost of
energy consumed within that area. DREM
anticipates meeting with local and international
stakeholders to delineate the options available,
which may result in a staggered approach with
short-, mid-, and longer-term options.
Task B8. Develop an Investment /
Transactional Implementation Plan
to Unlock Additional Energy
Resources in Georgia
Last quarter, DREM received USAID approval to
move forward with two priority projects – the
Kvesheti and Mieta HPPs – with the goal of
advancing both projects from their current pre-
feasibility stage through to commercial close. In
January, DREM secured project resources and
refined the scope, and anticipates deployment
for Phase I: Fatal Flaw Assessment in March 2020.
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ACTIVITY C. REGIONAL ENERGY PLANNING
Task C1. Countering Malign
Kremlin Influence (CMKI)
After DREM submitted its draft scope of work
for Serbia and Croatia CMKI studies, which were
based on the Georgia pilot approach,
USAID/Serbia provided clearance to proceed
with a Serbia pilot last quarter.
DREM identified and contracted the subtracting
resources to execute this work in December
2019, and in January 2020 the project completed
an inception report that will be shared with
USAID in early February.
Next Steps – February 2020
DREM will plan an in-country visit for the
subcontractor to confirm and verify findings in
the desk research and inception report.
Task C3. Communications
In January, DREM updated several fact sheets and
developed concept notes on two
communications initiatives that will be
implemented in 2020.
Fact Sheets:
• Gas – resubmitted to USAID
• CMKI – resubmitted to USAID
• Cybersecurity – approved and finalized
by USAID
• OSHEE Electricity Theft – resubmitted
to USAID
In February, DREM plans to develop a fact sheet
on district heating in Serbia.
Concept Notes:
• Albania Electricity Theft Awareness
Campaign – this is a public awareness
campaign to reeducate consumers on
issues of electricity theft. The objective
is to discourage and prevent electricity
theft could significantly contribute to
further reduction in commercial and
collections losses at OSHEE, which will
help USAID meet its goals under DREM.
• Campaign and Regional Energy
Knowledge Survey – the objective of the
research is to understand the public's
attitude towards and awareness of
market reform efforts, the need for a
diversified energy portfolio (RES
integration), and USAID's work in this
sector
Next Steps – February 2020
With the guidance of USAID, DREM will finalize
the fact sheets and obtain approval regarding
concept notes.
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ANNEX A. OSHEE Electricity Losses - January 2020
Shkodra
Losses remained at the same level as January 2019 but improved slightly from December 2019, even though energy
consumption increased by 6.5% from 65 GWh to 70 GWh. The low rate of improvement is due to 11,000 verification
cases that were not reflected in the billing system, since they had only signed reports from readers with no picture
evidence.
Durres
In Durres, January 2020 losses decreased slightly compared to January 2019 but increased compared to previous
months’ losses. These slow improvements were expected due to weather conditions and the earthquake in Durres.
Vlora
In Vlora, losses improved by almost 2% compared to January 2019. Despite the 10% increase in electricity usage
from December 2019 to January 2020, losses continue to be lower than in previous months.