Energy regulator gets boost from EU

A major reform project was launched Dec. 2 to help the Lithuanian energy regulator become an organization ready for the challenges of EU accession.

The project - "Strengthening the Market Regulator" - will increase the Lithuanian energy authority's capabilities to monitor and control the deregulated energy market as demanded by EU directives. It is to be carried out as an EU-winning accession project in conjunction with the Italian government.

With responsibilities for gas, electricity and heating markets, the Lithuanian regulator, the National Control Commission for prices and energy (NCC), was established in 1997 as an advisory body to the government. The commission subsequently took full control of setting energy prices and has set out a basic regulatory framework.

The new project over the next two years will help it to increase these capabilities.

Regarding this process, commission chairman Vidmantas Jankauskas said, "On paper we have wide powers to regulate the market, but many of these [do not exist] yet in practice. The project will help us put these powers into use."

The main aims of the regulator are to supervise the market, to ensure long-term stability and to monitor levels of quality of service.. "Consumers, such as industry, need to know that there will be a long-range stability in prices and a high quality of supply," said Jankauskas. "Quality of supply is especially important, for example in the provision of heating".

According to Jankauskas, the reforms will also be of benefit to suppliers in the energy market. "Suppliers need to have stability in the market overall to carry through complex and long-term contracts. This project will help us to realize these aims within a liberalized market."

Another major change to take place in the energy market in the near future will be the closure of the Ignalina nuclear power plant. In Jankauskas' view, "This closure will be beneficial to the development of the energy market. It will mean more players, more competition and more development. The strengthened commission will be vital in ensuring market stability through the closure process".

To face these greater complexities in the market, the project will develop a liberalized energy market and upgrade the NCC's capabilities to include a licensing system for distributors and a pricing structure in accordance to EU directives.

The NCC will be partnered on the project by the Italian government under the auspices of the EU twinning projects.

"These projects are not like having a consultancy coming in to visit," said Michael Graham, head of the EU delegation. "They are more like a marriage where both partners work toward a common goal".

According to Jankauskas, the Italian government was chosen in an open tender for the project for the similarities in its experience. "The Italian market has moved through the changes required by the EU - from being a state owned monopoly through to divestment, restructuring and divestment. They have a high level of experience in this area."