IERN International Energy Regulation Network

The process of liberalisation of the electricity sector is undergoing.

The generation of electricity ceased to be monopolistic activities of the Electricity Authority of Cyprus (EAC) as of 1st May 2004.

With effect from January 1st 2009 the market will be liberalised for all non-domestic consumers, and with effect from January 1st, 2014 all consumers of electrical energy will be able to select their Supplier according to what is in their best interest

Prices are still regulated.

Transmission and distribution sectors remain monopolistic property of the EAC.

An Independent Transmission System Operator has been appointed. EAC is acting as Distribution System Owner and Operator and as Transmission System Owner.

1st of May 2004, the supply of electricity ceased to be monopolistic activities of the Electricity Authority of Cyprus (EAC).

Currently 726 electricity consumers are eligible, representing about 35% of total demand. Eligibility threshold set at 350,000 kwh per year. The annual electricity bill of these 726 consumers is estimated to amount to about CY£85 (€145) million. These consumers are free to select their Electricity Supplier.

CERA’s efforts, which commenced in 2005, continued with intense activity in 2007 and were targeted at completing the legal framework for the natural gas market.

However, Cyprus Government declare its intention to exercise the emergent and isolated market derogation.

In accordance with the said intention a new amendment of the Law regulating the Natural Gas Market of L.199(I)/2007 is in force. The amendment provides among other issues that in the event that the Council of Ministers decides to assign the import and supply of natural gas in the Republic of Cyprus in one undertaking and the creation of a land based Energy Center as the exclusive Receiving Terminal, with Storage facilities and installations for Regasification of Liquified Natural Gas (LNG), the implementation of Articles 8 -14, 16(1-3), 18, 21, 22(5-6), 23, 27, 28, 31, 32 and 33 of the basic Law shall be suspended.

Until such time as the decision by the Council of Ministers is taken, CERA shall be performing its duties derogating from the above mentioned articles, refraining from issuing licences in order to secure that the attainment of the purpose will not be put at risk.

At present CERA is examining the consequences that this amendment will have on its powers and competences as well as on the basic framework of the natural gas market.

Within the framework of its responsibilities, CERA prepared the necessary amendment in the Legislation concerning the regulation of Natural Gas Market in order to secure an adequate level of security in the supply of Natural Gas and to attain the smooth operation of the domestic Gas market, as provided in the relevant European Directive, 2004/67/EC of the Council, of the 26th of April, 2004, concerning measures to safeguard security of Natural Gas supply. Taking into consideration the intention of Cyprus Government to exercise the emergent and isolated market derogation, the proposed amendment will have to be revised.

In the energy sector, 35% of the electricity market was opened to competition, after Cyprus's accession to the EU. The Electricity Authority of Cyprus (EAC) is still practically the only supplier, with the sole exception of two independent power producers (IPPs) generating electricity for own use. However, there is considerable interest by (private) producers, which are expected to enter the market by the end of 2008. In this respect, a number of licenses to IPPs have already been awarded by the Cyprus Energy Regulatory Authority (CERA) for the generation of electricity by conventional and renewable energy sources (corresponding to around 14,96% of the total licenced capacity by conventional means and 100% by renewable energy sources). Furthermore, a number of applications with a large capacity for the generation of electricity from the private sector are under consideration.

With effect from January 1st 2009 the market will be liberalised for all ‘’non domestic’’ consumers, and with effect from January 1st, 2014 all consumers of electrical energy will be able to select their Supplier according to what is in their best interest.

Upon the enactment of the Regulations organising the operation of the Natural Gas Market were put into force, applications have been submitted to CERA for the:

• construction, operation and exploitation of installations for import, storage and regasification of liquefied natural gas in the Vassilikos sea area for own use (production of electricity)
• construction, operation and exploitation of installations for import, storage and regasification of liquefied natural gas in the Vassilikos sea area with the intention of supplying natural gas to wholesale, eligible and not eligible consumers.

The above applications are registered in the official records of CERA for future action by CERA in accordance with the provisions of the Law.

Furthermore, the Government of Cyprus has already established a public company ‘DEFA’ (Shareholding: 51% by Government, 39% by Electricity Authority of Cyprus and 10% is available to other IPPs), which has the obligation and the responsibility for the importation and supply of Natural Gas in Cyprus.

The Law of 2003 on Regulating the Electricity Market, L.122(I)/2003 (in Greek only) in English (unofficial translation only)

The Law of 2004 on Regulating the Electricity Market – Amendment, L.239(I)/2004 (in Greek only)

The Law of 2005 on Regulating the Electricity Market – Amendment, L.143(I)/2005 (in Greek only)

The Law of 2004 on Regulating the Natural Gas Market, L.183(I)/2004 (in Greek only)

The Law of 2006 on Regulating the Natural Gas Market – Amendment, L.103(I)/2006 (in Greek only)

The Law of 2007 on regulating the Natural Gas Market, Amendment, L.199(I)/2007