Third Liberalisation Package for Bosnia and Herzegovina (BiH) Regulatory and Energy Assistance Project (REAP)

This package applies to both electricity and gas, with key components including the unbundling regime, stronger authorities of the regulatory authorities, retail markets, and European Network of Transmission System Operators (ENTSO) and European Network of Transmission System Operators Gas (ENTSOG). The unbundling regime involves the separation of transmission and distribution systems from supply activities. Transmission systems are required to be unbundled through ownership unbundling, independent system operator (ISO), or independent transmission operator (ITO) models. Distribution systems, on the other hand, must be unbundled from supply activities, but ownership unbundling is not required. Instead, functional and legal unbundling is sufficient. The regulatory authorities in BiH are required to have stronger powers, including the designation of a single regulatory authority, regulator independence, and expanded duties. The regulatory authority is responsible for ensuring compliance with the sector-specific acquis communautaire and imposing effective, proportionate, and dissuasive penalties on electricity undertakings that fail to comply with their obligations or relevant legally binding decisions. The retail markets Directive has been expanded to address customer protection in more detail, including provisions for vulnerable customers, energy poverty, and social security systems. The Directive also requires an economic assessment of long-term costs and benefits for plans related to smart meters. ENTSO and ENTSOG are required to cooperate to ensure optimal management, coordinated operation, and sound technical evolution of transmission systems. BiH is expected to review and comment on the network codes as they are proposed. The implementation of the Third Liberalisation Package is expected to have a significant impact on the energy sector in BiH, with a focus on increasing competition, improving customer protection, and promoting the development of the internal market in electricity and gas. The European Commission issued a decision on May 6, 2011, to propose the implementation of the Third Liberalisation Package in the Energy Community. The next meeting of the Ministerial Council is scheduled for October 2011, where the adoption of the package is expected to be discussed. The implementation of the package is critical for BiH to align with the EU's energy policy and to promote the development of a competitive and sustainable energy market.