The electric power market of Armenia will be liberalized

ArmInfo. The electric  power market of Armenia will be liberalized. Amendments to the law  "On Energy" and a package of related laws were made at a meeting of  the National Assembly of Armenia on February 7 in the second and  final reading.

According to the Deputy Minister of Energy Infrastructures and  Natural Resources Hayk Harutyunyan, in the developed countries the  electricity market has long been liberalized, and Armenia is taking  the first steps in this direction.

In order to solve the task for the next five years, the draft law  regulates the rights and powers of the Ministry of Energy  Infrastructures and the Commission for Regulating Public Services, as  well as mechanisms for trade and consumer protection. The current  model of electric power system management was introduced in 2004, and  is based on the sole buyer and seller model.

According to the current law, the operator in the person of "Electric  Networks of Armenia" undertakes to carry out wholesale purchases of  electricity from generation facilities and resell it to consumers.   Meanwhile, the country's electricity market, both large-wholesale and  small-wholesale, does not fully regulate issues related to the  export-import of electricity. The amendments envisage the  liberalization of the energy market in Armenia, which is conditioned  by the needs of the domestic market, as well as by using the  opportunities for electricity trade in the region. To liberalize the  electricity market, it is necessary to move to a new market model,  which helps to increase the efficiency of wholesale and retail  markets.

As a result of the amendments, Armenia will switch from a single  regulating model of a seller-seller operating in the market to a new  liberal model, modern trade rules will be introduced, the tariff  regulation system will be improved, and new instruments for the  development of interstate trade will be introduced. It is envisaged  to divide the functions of distribution and equipment, as a result of  which other suppliers, each as a licensed organization, will be able  to act on the market, which in turn will increase the levied state  duties.

Today, neither electricity producers nor its large consumers are  responsible for sales and consumption volumes (ordered capacities),  which can cause unlimited fluctuations in tariff regulation. In the  context of the best international experience, the responsibility of  producers and large consumers for the quantities of electricity  ordered and actually used should become. On the road to market  liberalization, it is envisaged to create both an electronic platform  and the formation of new structures in the electric power market.

In particular, it is envisaged to create a market operator, who will  act as the main person in charge of electricity trade. It is also  planned to improve the tariff policy and introduce effective  mechanisms. Speech, in particular, is about night and daily rates,  their magnitude, time of application. In this regard, it will also be  possible to consider seasonal, peak or nighttime busy times in order  to establish new tariffs. 

Liberalization of the electricity market will have a direct impact on  tariffs. It is expected that the use of competitive elements will  help reduce tariffs. Under these conditions, each market participant  will seek to reduce costs in order to gain a favorable position in  the market and sell their products. As a result of a number of  programs of regional importance, it is expected to create a basis in  this direction in 2019.