Law No. 05/L-085 on Electricity (2016) provides small commercial entities with access to the so-called Universal Supply Service – the right to remain in the price-regulated energy market. In contrast, large commercial entities must find their energy suppliers licensed by the Energy Regulatory Office (ERO). In commercial terms, this means a transition of the energy market from a single supplier to dozens (currently up to 20). This transition aims to develop the energy market, increase competition, and improve service quality for consumers.
However, despite the mutual benefits for both suppliers and commercial entities, the transition, originally scheduled for 2016, has been postponed until June 2025 due to extraordinary circumstances such as the COVID-19 pandemic and the energy crisis caused by the Russo-Ukrainian War.
Starting from June 2025, the ERO has ended the postponement and paved the way to the realization of this transition, the effects of which have not been felt yet due to an additional 60-day grace period provided, where commercial entities are required to find their supplier.
Despite several postponements, the transition remains premature in Kosovo because of two main issues: legal and commercial.
Legal Issues of the Transition
With regard to legal issues, the Law on Electricity has an error and a gap.
The error derives from an open discrepancy between provisions that refer to the legal criteria for mandatory transition. In one part, it is stated that the Universal Supply Service is reserved for “enterprises that employ no more than fifty (50) employees and have an annual turnover of not more than ten (10) million euro,” and in another part, it is stated that “the right to supply as a universal service shall be enjoyed by all … customers that have an annual turnover of not more than ten (10) million euro, or not more than fifty (50) employees” – it is effectively a battle between “and” and “or.” Recently, the ERO published an unbinding guideline, in which it applied the “or” option, which obliges more commercial entities to enter the free energy market.
The gap derives from the ambiguity of the required fiscal period during which this mandatory criterion must be fulfilled. It is unknown which fiscal period the ERO must take into consideration for evaluating whether a commercial entity has the right to benefit from the Universal Supply Service or if it has to find its own supplier. This imprecision directly impacts commercial entities that are close to this threshold.
For most of them, the Commercial Court of Kosovo is ordering interim measures, which are postponing the transition for parties to these cases.
Commercial Issues of the Transition
From the early stage of the transition, energy suppliers seem to have been exploiting the situation by offering inflated prices that are disproportionate to average prices on the energy stock exchange. This makes commercial entities unwilling to be a part of the transition.
Another issue is the inexperience of most of the energy suppliers in providing services. Most of them have been licensed after 2021, and regardless of existing formally, they have been operating for a very short time. Also, during the transition, other suppliers are expected to be licensed and enter the energy market, which is a golden ticket for foreign investment. In this aspect, commercial entities are hesitant to do business with inexperienced suppliers and look for reliable ones.
On the other hand, due to their limited personnel, the majority of commercial entities lack legal expertise in negotiating and entering into commercial contracts with energy suppliers. Additionally, they are now also facing time pressure.
Conclusion
Transition of commercial entities to the liberalized electricity market is a precondition for integration into the open market generally and the EU single market especially. Ideally, the transition had to be implemented when a tripartite alliance (between the ERO, commercial entities, and energy suppliers) was ready and when circumstances would have been favorable, especially for commercial entities. Nevertheless, now the transition requires urgent oversight and a coordinated intervention, first by the ERO by maintaining stable prices offered by suppliers and second by corporate lawyers by advising commercial entities. Otherwise, negative consequences in the commercial field can be expected.
By Kujtim Kerveshi, Managing Partner, and Agon Drini, Associate, Kerveshi & Partners
This article was originally published in Issue 12.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
