Posted: 1 year ago

Irina Milorava: Georgia will Adopt a New Law for the Power Sector Law by Late August

The current challenges in Georgia’s power sector, and how to become an energy self-sufficient country – Irina Milorava, head of the Georgian National Energy and Water Supply Regulatory Commission (GNERC), has answered these and several other interesting questions for the TV Program Business Partner.

First of all, Georgia is expected to adopt a new law on Power Sector by late August. The bill has been submitted to the parliament, Milorava noted.

“We assumed obligations with the energy community regarding the adoption of this law, and launch necessary reforms to help start forming the appropriate institutions and platforms.

This new law will lead the country towards a very interesting model; namely, hourly market tariffs. Today, we are accustomed to an electricity deficit, or a systemic disorder balanced through generation. When talking about market liberalization and development of competitive market, it presupposes that consumers become active participants in this market, and they receive certain benefits from the market. A deeper analysis of the the objective of this model. Electricity is a competitive product in itself. Today about 90 generation facilities operate on the market is necessary, and there are opportunities for electricity imports from neighboring countries. And the question is: why should we fix the tariff in a competitive market? And soon, consumers will enter the market themselves and they will be able to communicate with generation facilities. Last year, two consumers appeared on the wholesale market. Since May 1, 2019, ten new consumers appeared, and the process continues”, Milorava noted.

The GNERC chairman has also discussed energy security challenges, and noted that a country with rich hydro resources should not refuse to develop hydro-electric generation, because this is a cheaper resource compared to alternative resources.

As reported, on May 3, the GNERC director submitted the 2018 report to the Parliament, and declared that Georgia’s dependence on electricity imports are dramatically growing, and domestic generation development is the only mechanism to neutralize the growth of electricity imports.

The power sector is not the only component of energy independence. Therefore, the country should make us of all energy resources, even more so when the country is rich with these resources, and all projects should be implemented in compliance with the highest environmental protection standards, Milorava said.

“The energy sector is one of the important components of the economy, not only energy independence, but also national independence, in general. We remember bad examples of what energy dependence can cause. Therefore, this is the primary task. I have stressed in the parliament that energy imports have been growing dramatically. Imports have tripled over the past 2 years, and this is not a small figure. The direct mechanism for neutralizing imports-dependence is to develop domestic generation. It is unimaginable to seek alternatives.

What should a country with rich hydroelectric resources develop? Naturally, hydroelectric resources. I have frequently heard about the development of solar and wind resources, but we should not refuse developing hydro resources, because this is a cheaper resource than the alternatives. When talking about developing generation, I imply that all projects must reach environmental standards”, Milorava said.

In response to the question of how hydro resources should be developed when local residents frequently protest against the implementation of hydro projects, Milorava noted that the authorities should comprehensively explain to the population what benefits will be derived from hydro power projects, and all objections will disappear.

“I believe the main problem comes from a miscommunication with our citizens. If we manage to provide the correct explanations about this or that project for a specific region, village, country, power sector, I am sure all objections will disappear. We had a similar example in Batumi tourism zone. Energo Pro Georgia could not rehabilitate the transmission line because of resistance from local residents. The reason was miscommunication. Therefore, we provided intense cooperation with local and national government. The company representatives started door-to-door explanations to detail  why it was necessary to expand this network.

These people think they hinder a company. In reality, tens and hundreds of people stand behind each company when they cannot receive electricity. You should visit them as many times as necessary. We were facing serious problems, but now the scales are more balanced”, Irina Milorava said.

The GNERC chairwoman also explains the reasons behind the breakdowns that took place several days ago on Zhvania Square in Tbilisi, and noted that water and energy supplier companies bear full responsibility for the quality of the provided services.

If they fail to satisfy certain quality indicators determined by the GNERC, their tariffs will be negatively affected. As for the breakdown on Zhvania Square, the regulator will explore the case in detail.

“The companies will bear responsibility for the quality of services and products. They are licensed companies, and the nature and essence of their license is that they are the only bodies responsible  for the supply of high-quality products.

The situation in Tbilisi took place in the zone owned by Georgian Water and Power (GWP) and, naturally, our commission will explore this issue. We  maintain constant communication with  company managers, and they will have to submit detailed information about the reasons behind the repeated breakdowns the next day”, Milorava noted.

GWP has almost tripled investments when compared to previous years, but the case of Zhvania Square shows that these efforts do not suffice, and investments should increase. In general, water and power supply companies are interested in improving the quality of services and minimize the number of breakdowns, Milorava said.

“We supervise breakdowns in an online regime. We have developed a special software to detect  breakdown locations, determine repair times, how many clients are left without water, and so on. These cases will not be finished only by explorations. The trend of breakdowns will affect company tariffs. In response to certain actions, we tell the companies that we want to see a positive trend. Therefore, we set positive target indicators for these companies. If these indicators are not met, this means that significant funds will be deducted from company revenues when calculating the next tariff. Therefore, this factor is an additional stimulus for companies to fulfill not only their obligations regarding supply, but also to reduce the number of similar breakdowns”, Irina Milorava said.