Bosnia and Herzegovina (BiH) Regulatory and Energy Assistance Project (REAP)

The project focuses on resolving internal Federation issues that are essential for actual market design. Key issues to be addressed include power balance, cost reflective tariffs, vulnerable customers, market prices, public service obligations, and unbundling. Power balance is a critical issue in the Federation, as there is a persistent supply imbalance between the two electricity providers (EPs). To address this issue, a long-term power balance analysis is required, covering a 5-10 year period. The analysis should forecast electricity and demand for each EP, examine the impact on annual intercompany exchange, and develop a realistic generation investment plan for the Federation of Bosnia and Herzegovina (FBiH). Cost reflective tariffs are another essential issue to be addressed. The tariffs should be cost reflective in both EP BiH and EP HZHB, and a single cost reflective tariff should be implemented in FBiH. The legislative and administrative provisions defining and ensuring the implementation of single cost reflective tariffs in FBiH need to be established. A transition plan to reach full cost reflective tariffs in FBiH, including timing, support, and coordination, is also necessary. A vulnerable customers program is required to prevent the impact of cost reflective tariffs on customers who cannot pay them. The program should address the differences between current and cost reflective tariffs, the possible impact on customers, and options to protect vulnerable customers. The impact of market prices on the FBiH power balance and intercompany exchange should also be examined, including the requirement to supply before selling from a commercialization point of view. Public service obligations, universal service, and supplier of last resort are essential services that need to be implemented in FBiH. The project should examine how to implement these services, including the necessary legislative and administrative provisions. Unbundling is also a critical issue, as it is a precondition for establishing an electricity market. The status of the law and the extent of planned unbundling need to be examined. The project aims to create a stable and efficient electricity market in the Federation, which will benefit both consumers and producers. By addressing these critical issues, the project will help to establish a well-functioning electricity market in BiH.