ADVANCED ENGINEERING ASSOCIATES INTERNATIONAL, INC. /SGGA
The Bosnia and Herzegovina (BiH) Regulatory and Energy Assistance Project (REAP) aimed to facilitate the gradual opening of the electricity market in BiH.
2014 · 7 pages

Abstract
The project was implemented by Advanced Engineering Associates International, Inc. as the USAID contractor. The project's focus was on developing a transition period for the electricity market opening, which would allow for a gradual introduction of market conditions. The transition period was established to provide a smooth transition from regulated tariffs to market-based pricing. The project considered two options for the duration of the transition period: gradual removal of regulated tariffs and gradual removal of regulated tariffs with the introduction of a Default Supplier (DS) service. The subgroup agreed that the institution of a DS program was the better way to segue into a competitive market, removing the shock of a sudden shift to full market pricing. The DS service would provide a default supplier for customers who did not find a suitable market supplier. The DS price would increase over the transition period, which ended on December 31, 2014. The project developed two options for the DS service: Option A, where eligible customers would buy their demand volume at market price or at the DS price, and Option B, where eligible customers would buy a gradually decreasing part of their demand volume at a regulated price and the remaining volume at market price or at the DS price. The project also considered the classification of customers, which included large customers, industrial and commercial customers (medium customers), and small commercial customers and households. The time schedule for gradual market opening was developed, with large customers and medium customers transitioning to market-based pricing over a period of time. The project identified preconditions and impediments for market opening, which varied depending on the group of customers. For large customers, preconditions included metering, unbundling, and cost-based tariff. For medium customers, preconditions included metering, unbundling, and cost-based tariff, as well as the ability to supply eligible customers. For small commercial customers and households, preconditions included metering and the ability to supply eligible customers. The project's recommendations included the implementation of a DS service, the gradual removal of regulated tariffs, and the development of a time schedule for gradual market opening. The project also recommended that regulators take action to create preconditions for market opening, including metering, unbundling, and cost-based tariff.
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Classification
USAID DEC