House passes ‘landmark’ electricity liberalisation bills (Updated)

After years of start-stop discussions in committee, the House on Thursday passed the legal framework for opening up the electricity market – with the energy minister hailing it as the single largest reform in the sector after Cyprus joined the European Union.

All 42 MPs present voted for the three bills which, together, form the backbone for liberalising the market – at least on paper.

The first bill relates to regulating the electricity market, the second to the operation of the energy regulator, and the third regulates the natural gas market.

Under the first bill, a new regime comes about relating to the issuing of licences for the production, transport, distribution, supply and storage of electricity – and also giving third parties access to power transport and distribution infrastructures.

The second item of legislation renders the Cyprus Energy Regulatory Authority (Cera) legally and operationally independent of any other public or private entity.

The third bill relates to the fact that, up until now, a single state-controlled entity – the Natural Gas Public Company – had by law been the sole importer and distributor of natural gas in Cyprus.

Cyprus needed to pass these reforms by December 31 of 2020 to harmonise with EU regulations regarding the bloc’s internal energy market. Having missed that deadline, Nicosia received a notice from Brussels on February 3 this year.

Shortly after the act of parliament, Energy Minister Natasa Pilides released a statement thanking the legislature for coming together and passing the government bills.

Calling the legislation “the most important reform in the electricity market since Cyprus’ accession to the EU”, Pilides said the next step was strict adherence to the roadmap, which envisions October 2022 for the full opening up of the sector.

The new system will come online on a trial basis in April 2022.

Pilides said the new regime would strengthen the role of end-consumers of electricity.

For instance, consumers would be able to switch suppliers within a maximum of three weeks from the date of applying. This would be further cut down to just 24 hours as of January 2026.

Under the EU’s internal energy market rules, consumers will be able to request the installation of smart electricity metres at no additional cost; household customers and microenterprises will have access, free of charge, to at least one tool comparing the offers of suppliers, including offers for dynamic electricity price contracts; to switch suppliers free of charge within a maximum of three weeks and to participate in collective switching schemes.

End-consumers with smart metres will be able to request dynamic electricity pricing contracts with at least one large supplier; and they will have the right to act as ‘active customers’, for example by selling self-generated electricity, without being subject to disproportionate or discriminatory technical requirements and to have summarised clear contractual conditions.

In remarks of his own after the vote in the plenum, Disy MP Kyriacos Hadjiyiannis said the legislation also regulates the penetration of renewable energy into the energy grid as never before.

On the mooted switch to natural gas for power generation, he noted this was “not the alpha and omega in bringing [electricity] prices down”.

The government’s overriding objective is to cut carbon dioxide emissions and do its part for the European Green Deal, Hadjiyiannis said.

The first natural gas-powered plant in Cyprus is expected to go operational no earlier than 2023.