The daily newspaper Pobjeda published an article entitled \u201cCEDIS Is Not Making a Loss Because of Prices but Because of Business Decisions\u201d, which explicitly states that \u201cthe negative financial result reported at the end of last year by the Montenegrin Electricity Distribution System (CEDIS) was not caused by the prices of electricity for covering losses set by the Energy Regulatory Agency (RAE), but by the company\u2019s business decisions\u201d. It further states that \u201cin recent months, the public has been inundated with various statements that obscure the real background, and that there has generally been an attempt to impose the argument that RAE set electricity prices for covering losses and that CEDIS consequently operated at a loss\u201d. The article cites an interview given to the newspaper by Branislav Prelevi\u0107, President of the Board of the Energy Regulatory Agency (RAE), in support of all these claims.<\/p>\n
Given the position he holds, as well as Mr Prelevi\u0107\u2019s professional integrity, CEDIS management is inclined to believe that the claims in question are the author\u2019s free interpretation of an issue with which they are not particularly familiar, and therefore we expect Mr Prelevi\u0107 to respond to the article as well. This is especially so because the article is inconclusive and contains sweeping assessments and assertions.<\/p>\n
In order to provide the public, and above all our service users, with accurate information, we would like to point out the following:<\/p>\n
It is an undisputed fact that the Energy Regulatory Agency for Energy and Regulated Utility Services sets the regulatory allowed revenue and prices for network operators (CEDIS and CGES), and that, as part of this process, it also determines and approves the price for procuring electricity to cover losses for the three-year regulatory period. The procedure for determining regulatory allowed revenue and prices is clearly prescribed by the Methodologies for Determining Regulatory Allowed Revenue and Prices.<\/p>\n
In view of this fact, and its own role in protecting the interests of both users and network operators, the regulator adopted the Rules for the Adjustment of Prices and Charges, which prescribe the conditions under which adjustments to the approved revenue and prices are made during the regulatory period, as well as when determining regulatory allowed revenue and prices for the subsequent regulatory period.<\/p>\n
Since operators procure electricity to cover losses through a transparent procedure guaranteed by the Montenegrin Electricity Exchange, in which the price of electricity is formed on the basis of supply and demand, it is almost impossible to achieve the price set by the regulator in procurement procedures. Procurement arrangements are a matter of business decisions, but anyone acting in good faith is aware that even the best analysts and experts in the energy market could not have predicted the disruptions that have occurred over the past two years. It is easy, with the benefit of hindsight, to say that different business decisions should have been made, but at the time they were made, doing so would have entailed a significant risk. In previous years, the practice was to procure all the electricity needed to cover losses for the following year during the current year. This was not done only in 2020, even though the previous management had the opportunity in December 2020 to purchase the outstanding quantities at prices significantly below the regulatory allowed level. Regardless of various media reports, including statements by individuals from CEDIS, this management believes that even the best market experts, both in the immediate region and further afield, could not have predicted disruptions of this magnitude in the energy market, and that in such circumstances it was commercially justified to procure electricity on a monthly basis, since this had not been done the previous year, when, as we have said, prices were significantly below the regulatory allowed level.<\/p>\n
We would like to emphasise in particular that CEDIS has never stated in any public communication that the Agency failed to correctly determine the price of electricity for covering losses when approving regulatory allowed revenue for the current regulatory period. Rather, it has stated that, based on that price, the approved cost of losses, or the revenue allocated for this purpose, is insufficient under the circumstances that have arisen to cover the actual costs of procuring electricity to cover losses in the system, which resulted in a negative financial result in 2021. Last year, CEDIS contacted the relevant ministry several times regarding this problem, seeking assistance in resolving it, but received no response.<\/p>\n
As the upward trend in electricity prices continued in 2022, it is already clear that CEDIS will inevitably record a negative financial result this year as well on this account. For this reason, we have contacted the relevant ministry three times, asking it to help us find the most favourable solution. We emphasise that our company is open to all constructive proposals for resolving this problem, regardless of their source, and proposals from the Energy Regulatory Agency are particularly valued and welcome, as we do not consider this problem to be CEDIS\u2019s alone. Operating at a loss will undoubtedly have a negative impact on the quality of our services and the reliability of electricity distribution to end users.<\/p>\n
Rather than commenting on the claims concerning salaries, we would point out that RAE approves a group of costs \u201cthat can be influenced\u201d, which includes salary costs. According to the final figures for 2021, these costs were approximately EUR 235,000 higher than the amount determined by the Agency for that year, which certainly did not have a significant impact on CEDIS\u2019s financial result.<\/p>\n
As we are submitting an application this year for approval of regulatory allowed revenue for the next regulatory period (2023\u20132025), and RAE has put revised or new Methodologies for Determining Regulatory Allowed Revenue and Prices, as well as Rules for Price Adjustments, out for public consultation, CEDIS has prepared and submitted to the Agency its opinion and suggestions on the proposed documents, recognising their importance.<\/p>\n
We expect RAE to accept and take our suggestions into account, while observing one of the fundamental principles of the Methodology: \u201ca balance between the interests of the operator and the users of the distribution system\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"
The daily newspaper Pobjeda published an article entitled \u201cCEDIS Is Not Making a Loss Because of Prices but Because of Business Decisions\u201d, which explicitly states that \u201cthe negative financial result reported at the end of last year by the Montenegrin Electricity Distribution System (CEDIS) was not caused by the prices of electricity for covering losses<\/p>\n","protected":false},"author":1,"featured_media":1232,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[129],"tags":[],"class_list":["post-9029","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-news"],"acf":[],"yoast_head":"\n