Antoris.mk: Is the “threat” about the drastic increase of the electricity price real?
The countries from the region, Bulgaria, Serbia and the others are facing the problem with the electricity prices as well. We are not the only ones affected by the increase of the electricity prices, but the UK as well, due to CO2-certificates. In all the countries, the electricity prices for the domestic users will be much higher. Thus, the electricity prices are currently a global problem.
Antoris.mk : The reason for the price increase?
The suppliers are buying from the traders, and the traders buy from the producers. If the cost of production goes up, it reflects in the final consumer. The electricity price on the world stock market has gone up. We, as MEPSO, have the same tariff for a year, which is determined by the Energy Regulatory Commission for 2021, so now we do not have any influence on the final price. When we ask for new price, we only ask for our part, for the transmission. The transmission of electrical energy we conduct through 110 and 400 kV overhead transmission lines.
Antoris.mk : Will you ask for a price increase for the transmission for 2022?
We still do not know. That is determined in the middle of the year – June 30. This year we have already gotten a price increase, not because of the increase of the costs, but due to lower incomes. As far as the incomes, they come from cross-border capacities, which means we charge the transport of electrical energy that flows through our transmission system between two countries, for an example, from Greece to Serbia and vice versa. In that aspect of the job, our incomes have been significantly decreased. A couple of years ago, we charged 22-23 million euros. Last year those incomes have dropped to about 10 million euros, which is a big negative difference. Moreover, the pandemic affected the transmission as well, resulting in a decreased need for electrical energy. I can cite the following example: before the pandemics, the electrical energy used to flow from Serbia to Greece, because the Greeks spend great amounts of electricity in the summer to satisfy the needs of the tourists. This year it was the other way around, more electricity was being transmitted from Greece to Serbia.
Antoris.mk : What do our interconnections with our neighbors look like?
We have excellent 400 kV interconnections, one with Serbia, one with Bulgaria, one with Kosovo and two with Greece (Bitola–Florina and Dubrovo–Thessaloniki).
Antoris.mk : What does the process from buying, through transmission, to the distribution look like?
The traders buy electrical energy on the stock market. Those are companies registered as power traders (link to the list of licensed traders with electrical energy: https://www.erc.org.mk/odluki/2021.02.01%20Spisok%20na%20licencirani%20trgovci%20so%20EE.pdf) They sell it then to the suppliers (link to the list of licensed suppliers of electrical energy: https://www.erc.org.mk/odluki/2021.02.01%20Spisok%20na%20AKTIVNI%20snabduvaci%20so%20EE.pdf) and the suppliers sell it to the consumers (households or large consumers, except the price for the households is regulated (controlled), it is not on a free market, they are being supplied by EVN Home). EVN Home receives the energy from AD Power plants of Macedonia (ESM). ESM has an obligation to offer energy to EVN – the universal supplier, in order to supply households at lower prices. I think that is a good, legal and practical solution! Can you imagine how high the price would have been for the households if there were not for the domestic production of ESM? In the future, the distribution percent from ESM to EVN, according to the Energy Law, will be decreasing. The prices are now higher on the free market. The traders with electrical energy are now key entities through which electricity is traded on the wholesale market.
Antoris.mk : A few days ago, the Energy Regulatory Commission (ERC) announced that they initiated proceedings to revoke the license of two companies, electricity suppliers on the Macedonian market. As a reason for such sanction was asserted “misconduct. Namely, the suppliers failed to secure on time the amount of electrical energy as bound by the contracts. They were warned couple of times to secure the contracted amount of electrical energy for their consumers, but failed to do so, therefore, AD MEPSO had to supplement the missing quantities intended for exceptional cases. The ERC reported that several companies tried to sell the electricity to their consumers at a higher price than the one stipulated in the contract, which is against the rules. The ERC reported that about hundred companies have complained about problems with the suppliers. What happened to the suppliers against which the ERC has initiated proceedings for revocation of their license?
The suppliers are not to blame entirely in this “uncommon situation” caused by the pandemic throughout the entire world. The reality is that the electricity price breaks records on the stock markets. Nobody, not even the suppliers, could have expected that the price would make such a big leap on the stock markets. They have made agreements with the consumers (smaller consumers on the free market) for electricity price of 50-60 EUR per one MWh, while they bought it, let us say, for 45 EUR. Suddenly, the price on the stock market triples. Now they are compelled to purchase electricity for 150 EUR by the traders, but have to sell it to the consumers at a price settled in the contracts! Therefore, we may say that suppliers are wrecked due to the newly developed conditions on the market, regardless of the ERC sanctions. ERC acts upon the legal provisions, it has to, but the reasons for unfulfilling the needs of the consumers by the suppliers are objective. Whole of Europe faces an electricity price surge. This situation could be compared to the financial crisis in 2008. I would repeat it once again; nobody could have foreseen such a situation. Nobody could have expected that the pandemic would last so long and do such damage across the world.
Antoris.mk : However, does the sanction on behalf of the ERC regarding the sanctioned suppliers “attach” a negative label that may not be objective?
Yes, those same companies functioned for years. To avoid misunderstanding that someone did “something” on purpose, because a smart person will not work “to their own detriment”.
Antoris.mk : What is your prediction in terms of the price in the near future, whether it can go back to the previous state?
Unfortunately, I do not see the possibility that the prices will decrease soon. Due to the legal imperatives for shutting down the thermal power plants that pollute the environment and the nuclear power plants in the European countries (Italy, Austria...), I am not optimistic about it. Even more, I think that the price in the future will only go up! The issue whether to build or shut down the nuclear power plants is debatable. Personally, I am “in favour” of building them. If they are built under strict safety conditions and the maintenance is following all the regulations, I think that the danger of a disaster like the one in Chernobyl in 1986 can be avoided.
Antoris.mk : How do CO2 permits influence the electricity price
The CO2 permit means: someone who produces electricity from fossil fuels – pays for the pollution they do to the environment. The certificates regulate the amount of CO2 a country is allowed to produce. There is a carbon market for that purpose. How does that market function? For an example, if the gas emission in a country is below the upper limit, another country can buy the permit from the first country so that it can emit CO2 more than the limitations on its territory. The price of the CO2 permits on this market has gone way up and that is one of the main reasons for the current electricity price surge.
Antoris.mk: 20 years ago, there was a rumour about the possibility for Macedonia to participate with certain percentage in the construction of the new nuclear power plant in Belene, but that topic is no longer discussed. Do you have any information whether the initiative is still ongoing?
Yes, recently I had a discussion with the colleagues from Bulgaria and they informed me that our east neighbour has not yet decided whether to start the construction of a nuclear power plant in Belene. What is even more interesting is the construction of a power plant of this sort takes 20-30 years. That is why we have directed most of our ideas towards the “green energy” from renewable energy sources. We expect an increased number of investments to be directed in that direction. We have requests for connection of photovoltaic power plants and wind power stations with capacity of 3 gigawatts (GW). If they were realized, we would not need any other kind of energy. Currently we have about 2 gigawatts production from the hydropower plants and the thermal power plants, together with TPP “Negotino”. If we succeed to realize the construction of the hydro-project Chebren-Galishte, we would have a so-called base energy and I think that we should head in that direction. The production from TPP Bitola will be replaced with photovoltaic capacities and a gas-power plant is planned. That is why the connections we make with Greece for the connection of the gas transmission lines are very important.
Antoris.mk : Is there any hope for the realization of the accumulation and hydropower plant Chebren-Galishte, which is also being discussed for decades?
As the Prime Minister said, about 30 companies showed interest at the beginning of the construction, but there are only six or seven companies left in the shortlist.
Antoris.mk : Recently, on August 29, the cornerstone for the 400 kV interconnection Bitola-Elbasan (Albania) was laid. What would that mean for Macedonia?
It will help us immensely. We will have a new connection to the West, which will include Albania, Italy, and Montenegro and through which we will have energy exchange. Second important thing, is that when the substation is built, the voltage can be easily balanced with the voltage coming from the east side of the system. It is foreseen, that the construction of the substation built by “Koncar” will be completed in 30 months. The construction of the overhead transmission line (built by “Energoinvest”) might be slightly prolonged due to the increase of metal prices.
Antoris.mk : Last year, 2020, AD MEPSO suffered loss from ca. six million euros. What was the reason for that negative balance?
I already told you, the reduced turnover through our power system, due to the reduced needs for electricity imposed by the Covid-19 pandemic.
Antoris.mk : In the peak of the crisis, you hired a large number of new staff, awarded high cash bonuses to employees, as well as to the members of the Board of Directors, what is the economic justification?
We were hiring new staff before the crisis. The information that the media has served was not correct, that AD MEPSO was hiring new staff in the midst of a health crisis. Yes, the salaries are a certain financial burden, but that does not increase the costs of the company significantly and the problem lies in the reduced monetary income.
Antoris.mk : Are the employees satisfied with the salaries?
Yes, we do have good salaries in comparison with other institutions in the country. Taking into consideration the fact that all of the employees are highly qualified, I think that the salaries are justified. However, I will emphasize the fact that in the region, in our industry, we have lowest salaries. In Kosovo, the president of the Board of Directors has two and a half times bigger salary than mine. In ESM are somewhat higher.
Antoris.mk : Is it correct that the members of the Board of Directors receive a fee of 1800 euros per month?
No, I think that the fee amounts to about 60 thousand denars. As far as the fees of the members of the Supervisory Board, compared to their responsibility, the amount is too low. I personally would never accept such great responsibility for such a fee.
Antoris.mk : What is the number of employees?
There are about 670 employees.
Antoris.mk : Is there an overstaffing?
Yes! However, with that we pay for social peace. Sure, we can reduce the number of employees, fire people and increase the salaries of the ones who remained. What do we get? Someone on the street – someone with a high salary! We are trying in every way to engage all of the people. I personally would not sign someone’s termination letter. Besides, those types of firings make people run abroad, so our engineers would find a job right away in highly developed countries such as Germany, Austria, Switzerland or France and they would certainly never come back. I am one of the exceptions who did come back. I studied, graduated and got my Master’s Degree in Energy & Power Engineering, but here I am, right there where you found me.