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DEVELOPMENT OF REGIONAL ENERGY
MARKETS FOR EUROPE AND EURASIA
(D-REM)
QUARTERLY REPORT: JANUARY – MARCH 2019 (FY19 Q2) CONTRACT AID-OAA-I-13-00019 / TASK ORDER AID-OAA-TO-TO-00017
NASA
ACRONYMS
AFM AF Mercados
AT&C Aggregate Technical and Collections Losses
CEO Chief executive officer
COR Contracting Officer’s Representative
CRM Customer Relationship Management
DHC District heating company
DPMEA Deputy Prime Minister in Charge of Economic Affairs
D-REM Development of Regional Energy Markets
EBRD European Bank for Reconstruction and Development
EE Energy efficiency
EnC Energy Community
ERC Energy Regulatory Commission
ESDD Environmental and Social Due Diligence
ESM Elektrani na Severna Makedonija (Electricity Plants of North Macedonia)
GoNM Government of North Macedonia
HPP Hydropower project
HQ Headquarters
HR Human Resources
KEK Korporata Energjetike e Kosoves (Kosovo Energy Corporation)
LCRD Loss Control & Recovery Department
MEMO Macedonia electricity market operator
MEPSO Makedonski Elektro Prenosen Sistem Operator (Macedonian Electricity Transmission
System Operator)
MoEcon Ministry of Economy (Macedonia)
NARUC National Association of Regulatory Utility Commissioners
OSHEE Operatori i Shpërndarjes së Energjisë Elektrike (Albania Electric Power Distribution
Operator)
PFS Prefeasibility study
RE Renewable energy
REEP EBRD Regional Energy Efficiency Project
RES Renewable energy sources
RESA Regional Energy Security Activity
RF Russian Federation
SEEA Serbia Energy Efficiency Activity
TEO Technical and Economic feasibility assessment
ToR Terms of reference
USEA United States Energy Association
USAID United States Agency for International Development
TABLE OF CONTENTS
ACRONYMS 1
EXECUTIVE SUMMARY 3 COUNTRY ACTIVITIES 3 REGIONAL ACTIVITIES 8
INTRODUCTION 9
SUMMARY OF PROGRESS ON TASKS 10
ACTIVITY A. ENERGY SECTOR REFORM 10 TASK A.1 SUPPORTING ENERGY LAW REFORM IN NORTH MACEDONIA (MISSION BUY-IN) 10
ACTIVITY B. ENERGY EFFICIENCY, UTILITY MANAGEMENT, AND ENVIRONMENTAL RESOURCE
MANAGEMENT 15 TASK B1. UKRAINE TRANSMISSION SUBSTATIONS MODERNIZATION FEASIBILITY STUDY 15 TASK B2. PERFORMANCE IMPROVEMENTS FOR THE NATIONAL ELECTRIC DISTRIBUTION NETWORK IN ALBANIA
16 TASK B3. USAID SERBIA ENERGY EFFICIENCY ACTIVITY (SEEA) (MISSION BUY-IN) 25 TASK B4. MODERNIZATION PROGRAM FOR ESM (ELEM) (MACEDONIA) 26 TASK B5. ENERGY MANAGEMENT SYSTEM DEMONSTRATION (WEST BALKAN COUNTRIES) 26 TASK B6. PROCUREMENT ASSISTANCE FOR KEK (KOSOVO) 26 TASK B7. APPROACH TO DEAL WITH THE NORTHERN KOSOVO ELECTRICITY SUPPLY AND DISTRIBUTION
CHALLENGE 27 TASK B8. DEVELOP AN INVESTMENT/TRANSACTIONAL IMPLEMENTATION PLAN TO UNLOCK ADDITIONAL
ENERGY RESOURCES FOR GEORIGIA (GEORGIA) 27
ACTIVITY C. REGIONAL ENERGY PLANNING, TRADE, AND ENERGY SECURITY 28 TASK C1. RUSSIAN ENERGY SECTOR INFLUENCE STUDY (GEORGIA PILOT) 28 TASK C2. U.S. – EUROPE ENERGY BRIDGE WEBSITE 28
PROJECT MANAGEMENT 30 PROGRESS TO DATE 30 MONITORING AND EVALUATION 30 NEXT STEPS 30
SUMMARY OF TETRA TECH MANAGEMENT AND SUPPORT LEVEL OF EFFORT (LOE) 31
FINANCIAL STATUS OF THE PROJECT 32
ANNEX A. REPORTING ON INDICATORS 34 D-REM TASK A1. SUPPORTING ENERGY LAW REFORM IN MACEDONIA 34 PERFORMANCE MONITORING TABLE – MACEDONIA 35 D-REM TASK B2. PERFOMANCE IMPROVEMENTS FOR THE NATIONAL ELECTRIC DISTRIBUTION NETWORK IN
ALBANIA 1
3 | USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT USAID.GOV
EXECUTIVE SUMMARY
This report summarizes the activities (including issues encountered), accomplishments, and next steps
recommended for the USAID-funded Development of Regional Energy Markets for Europe and Eurasia
(D-REM) task order covering the period of January 1 – March 31, 2019.
COUNTRY ACTIVITIES
Tetra Tech’s D-REM team is actively working on a wide range of energy sector projects in Albania, North
Macedonia, Serbia, and Ukraine. Our activities include:
• energy law and regulation enhancement;
• substation modernization;
• environment and social impact assessments;
• utility process and operations assessments and improvement support;
• energy efficiency assessments;
• district heating assessments; and
• assessments of outside influences on the region’s energy sector.
The COR also approved additional activities in North Macedonia, Kosovo and Georgia this quarter.
NORTH MACEDONIA
During Q2, D-REM supported the Government of North Macedonia (GoNM) in finalizing the following
package of renewable energy (RE) bylaws:
• Decree on the Measures for Support of Electricity Generation from Renewable Energy Sources
• Decision for National Mandatory Targets for Share of the RE in the Gross Final Energy
Consumption and for Share of the RE in the Final Energy Consumption in the Transport
• Decision on the Total Installed Capacity for Preferential Producers of Electricity
All three bylaws were adopted in February 2019. In addition, the GoNM adopted the Annual Program for
Financial Support to Produce Electricity Generated from Preferential Producers that Use Premiums (a
form of financial support that is awarded to a preferential producer of electricity generated from
renewable energy as an addition to the market price of electricity sold on the electricity market).
Premiums were introduced with the new Energy Law, in line with the Energy Community (EnC)
requirements. With these bylaws in place, all legal prerequisites for initiating a process for granting
premiums have been met. In light of this development, the Ministry of Economy (MoEcon) will now move
forward with a tender process for granting preferential producers the right to use premiums.
USAID.GOV USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT | 4
The D-REM team provided input and feedback to the draft Rulebook on the Quality Control of Electricity
that was subsequently adopted by the MoEcon. The D-REM team provided feedback and input to the
Compliance Program and the Rulebook on the Authorizations, Rights and Obligations of the Electricity
Transmission System Operator’s (MEPSO) Compliance Officer that were approved by the Energy
Regulatory Commission (ERC). The D-REM team developed the Natural Gas Supply Rules and provided
comments to the Rulebook on licenses which were adopted by the ERC.
The D-REM team also reviewed and commented on an amendment to the Electricity Supply Rules to
implement and establish a web-based platform where customers can compare the terms (prices) offered
by electricity suppliers. Feedback was provided to ERC.
In February 2019, an electronic auction was held to select the country’s universal electricity supplier. The
auction was designed in line with the new Energy Law in an open, transparent and competitive manner.
The two bidders (ESM Trade and EVN) that submitted initial bids participated in the e-auction. A
consortium of EVN Macedonia and EVN Supply won the tender by offering the lowest supply margin. The
GoNM’s official decision on nominating the universal supplier was adopted in March. With this, North
Macedonia became the first country in the EnC to select its universal supplier in an open and competitive
tendering procedure. D-REM supported the creation of the legal basis for introduction of the universal
supplier and provided feedback and input on the tendering procedure.
D-REM also finalized the draft decree on the operation of the newly organized electricity market operator
(Decree on MEMO), including its necessary technical, human and financial dimensions. D-REM shared the
draft with the MoEcon and DPMEA for their review and feedback. During March 2019, the initial and
revised draft versions of the decree were the subject of discussion at several meetings with key
stakeholders, including DPMEA, MEMO, MEPSO, and ERC.
USAID approved the scope of work and budget for the Elektrani na Makedonija (Electricity Plants of
Macedonia, ELEM) Modernization activity. Upon the GoNM’s March 19 renaming of ELEM, the activity is
now called ESM (Elektrani na Severna Makedonija (Electricity Plants of North Macedonia)). After signing a
non-disclosure agreement, the D-REM team received data from ESM and shared a report outline and
suggested content. We expect implementation of this activity will be initiated next quarter.
UKRAINE
During Q2, the D-REM team revised and finalized the Ukraine Transmission Substations Modernization
Pre-Feasibility Study (PFS). On January 16, 2019, D-REM sent its analysis of comments to Ukrenergo based
on the original requirements in the terms of reference (ToR). During a January 25 meeting between D-
REM and Ukrenergo, a final list of components to be included in the substation rehabilitation was
established. D-REM then reviewed its PFS report against the requirements for rehabilitation of the 12
substations including the technologies and other solutions Ukrenergo proposed to help reduce costs.
After it reviewed cost estimates for these elements, it submitted the final version of the PFS on February
26, 2018 thus completing Component A (Pre-Feasibility Study (PFS)).
After defining the final schemes and elements of the substations’ rehabilitation, D-REM resumed activities
under Component B (Environmental and Social Due Diligence (ESDD)) and submitted the final version of
the ESDD report on March 6. EBRD is now incorporating its comments into this report
5 | USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT USAID.GOV
Work on Component C (technical and economic justification, or TEO) also resumed. However, due to
the delay in receiving comments from Ukrenergo, and the substantive content of Ukrenergo’s
comments/changes, the planned completion of Component C has been pushed to the end of June 2019.
ALBANIA
D-REM advisors continued with performance improvements of OSHEE’s (Albania’s Electric Power
Distribution Operator) Shkodra region, to include the following interventions aimed at reducing losses
and improving collections and billing:
• assessing the skills and work attitudes of OSHEE staff;
• monitoring field activities;
• disconnections;
• meter inspections;
• meter reading process; and
• meter relocations.
D-REM advisors completed an employee skills assessment, interviewed 287 personnel in all Shkodra
regional zones, and conducted post testing and interview assessments. The assessment revealed that
employees’ overall level of knowledge and skills is very low, and many employees held negative attitudes
about both their work and the testing/assessment process. OSHEE management’s reaction to the
assessment was positive, and the company suggested D-REM develop a plan on rolling the assessment to
all other OSHEE regions. The report and a presentation on its findings and recommendations were
submitted to USAID on January 23, 2019.
D-REM also supported OSHEE senior management in establishing a Loss Control & Recovery Department
(LCRD). During Q2, the D-REM team helped OSHEE Human Resources (HR) Department complete the
first round of recruiting for LCRD positions by testing and interviewing candidates, and then providing
recommendations on the best ranked candidates. In March the successful new recruits were selected and
officially appointed by the CEO. OSHEE then started a second round of recruitment. To date, 70
candidates have submitted applications. The D-REM team also finalized the LCRD’s operating procedure,
outlining each unit’s main duties and responsibilities, including planning and analysis, field inspections and
reporting, loss calculations for the energy recovered and the customer complaint process. The first field
inspection by one LCRD inspection team found ten theft of service instances in only two days. Since these
instances included two commercial high demand customers, the value of the LCRD inspections will be
clearly seen in an increase in measured and invoiced energy consumption in the next quarter.
D-REM continued monitoring field activities in the Shkodra region, shadowing the teams assigned to
disconnect non-paying customers and control teams inspecting electricity meters for irregularities and
electricity theft. It also monitored the work of electricians in Zone 4 who were relocating electricity
meters from inside customer premises to areas where OSHEE employees would experience unimpeded
access. Progress on meter relocation has had direct measurable energy consumption results this quarter.
Just for the relocated meters the February and March of this year readings reflected an increase in
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consumption over the same period during 2018 by 4,603 kWh. This is an increase of over 20% and is a
clear indication that it is likely that quite a few customers, where meters were not readily accessible by
OSHEE personnel, were bypassing their meters. The current progress on meter relocation represents
only 7% of the total number of meters that should be relocated. The relocation of the remaining 93% of
the meters that are not readily accessible to OSHEE meter readers will result in a significant increase in
measured and invoiced energy consumption. This will in turn have a significant impact on reducing
measured losses due to reduction in the number of meters being bypassed. Regarding overall improvement
in AT&C losses in the Shkodra region, in the same period in (Jan-Mar) 2018, the losses in the pilot areas
were 45.3%, compared with 43% for the same period in 2019 and household collection efficiency trend
has been improved by 30%, from 44.8% for the period (Jan-Feb) 2018 to 77.7% for the same period in
2019. These statistics are a clear indication of the overall effectiveness of the improvements in loss
reduction and collection since the pilot program was initiated this quarter.
D-REM implemented a new meter reading and billing process that shortens the reading period from eight
to five days and enables all meters on a feeder to be read in one day. In February, this process was
implemented as a pilot in Zone 3 of Shkodra Region; this zone contains approximately 30% of the region’s
electricity consumption and is the most advanced in the network mapping process. The obstacles identified
during the first trial were addressed during a second trial in March.
In March, D-REM advisors met with OSHEE’s managing director to discuss progress on the workplan and
provide updates on its initiatives. The director recognized D-REM’s efforts in performance improvement
activities and discussed the possibility of expanding the key initiatives to other regions with high losses.
Also, D-REM, the head of LCRD, and the director of police in Shkodra Region met to discuss police
support to the LCRD inspection teams in Shkodra in preventing electricity theft.
SERBIA
After visiting ten candidate district heating companies (DHCs), D-REM’s Serbia Energy Efficiency
Assessment (SEEA) team responded to questions and requests from USAID/Serbia throughout February
to help justify the selection of the final three DHCs for pilot projects focusing on supply and distribution
system improvement and operation. USAID confirmed the final selection of the Nis, Pancevo and Cacak
DHCs) on February 21, and engineering work began in the first week in March. Based on the results of
Activity 3, the D-REM SEEA team will develop a draft work scope for Phase 2 activities.
D-REM met with Serbian commercial banks from February 12-16 to discuss financing structures for the
targeted cities and with the EBRD Renewable Energy Fund to understand options for supporting district
heating investments. D-REM also held meetings with financial departments of the selected DHCs to
evaluate their commercial performance. The D-REM team lead held meetings in Belgrade, Jagodina,
Vojvodina Provinces from February 24 to March 1 with USAID/Serbia to initiate the first phase of the
project’s Activity 3 (on-site data collection at the three selected DHCs), plan technical assessment
schedules, and brief USAID on project status and schedule requirements to complete tendering and
equipment installation before the next heating season.
The following conceptual designs for pilot projects were completed this quarter:
• Baseline heat load duration curves for Nis, Cacak and Pancevo for both the entire system and
for network branches/substations impacted by proposed projects;
7 | USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT USAID.GOV
• Pancevo solar thermal systems;
• Reconstruction of pump station into the thermal station of a sports and recreation center, Cair,
in Nis;
• Biomass boiler room in yard of the school, Kralj Petar I, in Nis;
• SCADA system for district heating facility, Majakovski, in Nis;
• Substation reconstruction, Ratko Jovic, in Nis; and
• SCADA in Cacak.
GEORGIA
During Q2, USAID approved D-REM to move forward with the “Investment/Transactional
Implementation Plan to Unlock Additional Energy Resources for Georgia” activity. The activity will include:
• Preparing a preliminary shortlist of viable hydropower projects (HPPs) under development in
Georgia that have been stalled;
• Identifying the reasons why they have stalled (technical, legal, financial, environmental, political,
social/community, etc.); and
• Preparing a high-level roadmap of required activities (e.g., transactions advisory, legal/regulatory
review) to remove impediments to HPP development.
D-REM is in the process of finalizing the resources to implement the agreed scope of work, and activities
will be initiated by the end of April 2019.
KOSOVO
In March 2019, USAID approved D-REM to move forward with the Korporata Energjetike e Kosovës
(KEK) procurement support activity. Resourcing for this activity is underway, with the local legal and
administrative/technical specialist and Senior Legal Advisor approved by USAID. Efforts are also underway
to identify the International Procurement Expert, who should be deployed in May. In terms of on the
ground activities, we anticipate that data collection and a situational assessment will be initiated by mid-
April pending final discussions with KEK.
On January 31, 2019, D-REM submitted to USAID a concept paper on its current understanding of the
current electricity supply situation in Northern Kosovo. The paper also suggested potential areas of
intervention in order to regularize the situation. To ground-truth the basis for these interventions, we
proposed that a D-REM senior advisor travel to Kosovo early next quarter to meet with counterparts
and stakeholders and obtain feedback from USAID’s Kosovo Mission, U.S. Embassy, KEK, KOSTT (the
transmission system and market operator) and KEDS (the distribution and supply company). We anticipate
that these meetings will yield sufficient information to develop a more definitive list of interventions, which
can translated into a scope of work with an associated budget.
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REGIONAL ACTIVITIES
RUSSIAN ENERGY SECTOR INFLUENCE STUDY (GEORGIA PILOT)
During Q2, USAID’s COR gave approval to move forward with this task, which will involve the preparation
of a study that will detail relevant recent developments and current strategies in Georgia’s energy sector
and analyze and summarize all potential Russian Federation (RF) sources of influence there. Resourcing
for this task is being finalized, and work is expected to begin near the end of April.
U.S. – EUROPE ENERGY BRIDGE WEBSITE
D-REM met with USAID’s Europe and Eurasia Bureau implementing partners during Q2 to discuss this
website’s content and target audience(s), the possibility of conducting a focus group, options for a
“matchmaking” function on the website, and roles and responsibilities for providing, reviewing and posting
content. D-REM prepared a draft focus group concept paper as well as a draft schedule for Phase 2.
USAID suggested a change in approach to the website whereby individual country tabs would be removed
in favor of a focus on regional and thematic activities. D-REM subsequently produced a website
development document based on the mockup and delivered it to USAID on February 11, 2019. The final
development document will serve as a blueprint for the web developer and help guide the decision-making
process for content and functionality. Incorporating feedback from USAID, D-REM also worked on
updating videos, photos, and graphics for the website.
As at the end of Q2, D-REM is awaiting further direction from USAID on advancing this work stream.
9 | USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT USAID.GOV
INTRODUCTION
The D-REM task order was issued under the Europe and Eurasia Regional Energy Security Activity (RESA)
and implements RESA’s four major objectives:
• OBJECTIVE 1. To diversify energy imports and reduce import dependence of key energy-
importing countries in Southeast Europe and the Black Sea region.
• OBJECTIVE 2. To develop a harmonized, effective regulatory framework to promote gas supply
diversification and related investments as well as an expanded and efficient regional gas market in
the Community.
• OBJECTIVE 3. To develop a competitive and transparent regional electricity market in the
Community that is well integrated with Western Europe’s electricity market and progressively
expands to include Black Sea countries.
• OBJECTIVE 4. To reduce Greenhouse Gas (GHG) Emissions and Promote Clean Energy
Transition. Energy provides vital services that fuel economic growth and social development and
is a critical factor in a variety of environmental and political issues.
To help achieve these objectives, D-REM focuses on improving the investment environment through:
• an improved legal and regulatory regime;
• use of innovative and more efficient technologies and business models;
• advisory support to governments and utilities to procure contracts and/or infrastructure
necessary for reliable and affordable energy, and
• helping partner countries make the transition to integrated, diversified energy sectors.
The above activities are distilled into D-REM’s four task components, which are outlined below, together
with the sub-tasks as at the end of the quarter:
• Task A – Energy Sector Reform
o Subtask A.1 Supporting Energy Law Reform in Macedonia (Mission Buy-In)
• Task B – Energy Efficiency, Utility Management, and Environmental Resource
Management
o Subtask B.1 Ukraine Transmission System Automation Program
o Subtask B.2 OSHEE Performance Improvement
o Subtask B.3 Serbia Energy Efficiency Activity (Mission Buy-In)
o Subtask B.4 Modernization Program for ESM (ELEM) (Macedonia)
o Subtask B.5 Energy Management System Demonstration (West Balkan Countries)
o Subtask B.6 Procurement Assistance for KEK
o Subtask B.7 Approach to Deal with the Northern Kosovo Electricity Supply and
Distribution Challenge
o Subtask B.8 Develop an Investment/Transactional Implementation Plan to Unlock
Additional Energy Resources for Georgia (Georgia)
USAID.GOV USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT | 10
• Task C – Regional Energy Planning, Trade, and Energy Security
o Subtask C.I Russian Energy Sector Influence Study (Georgia pilot)
o Subtask C.2 US-Europe Energy Bridge Website
• Task D – Alternative Energy Sources
SUMMARY OF PROGRESS ON TASKS
ACTIVITY A. ENERGY SECTOR REFORM
TASK A.1 SUPPORTING ENERGY LAW REFORM IN NORTH MACEDONIA (MISSION BUY-IN)
ACTIVITY: CONTINUING SUPPORT FOR DRAFTING AND WRAPPING UP OF THE SECONDARY
LEGISLATION STEMMING FROM THE ENERGY LAW
During Q2, D-REM continued to finalize, fine-tune, and draft bylaws stemming from the new Energy Law.
The team drafted four bylaws and met with the ERC to discuss and fine-tune them:
• Market Rules for Natural Gas
• Natural Gas Supply Rules
• Rulebook on the Closed Distribution System for Electricity
• Rulebook on the Closed Distribution System for Natural Gas
The two rulebooks were translated, and peer reviewed by D-REM in mid-March, as the ERC is planning
to organize a preparatory session in early April. The feedback from the peer review was addressed in the
rulebooks. In addition, ERC shared the rulebooks with the EnC for their comments and feedback. The D-
REM team will review and address EnC’s contributions before the preparatory session.
D-REM provided comments and feedback on the following drafts prepared by ERC:
• Rulebook on licenses;
• Explanatory notes on the tariff system for consumers connected to the electricity distribution
system, the tariff system for electricity transmission and the electricity market, and the rulebook
on the method for determining the maximum income and regulated average tariffs for electricity
transmission, organization and management of the electricity market and electricity distribution;
• ERC Charter, including the decision on amending the Charter;
• ERC Code of Ethics; and
• ERC Rules of Procedure.
The project team drafted, internally discussed, and shared the initial draft of the Rules on Complaints and
Settling Disputes with the ERC. The team was also involved in a detailed review and provided feedback
11 | USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT USAID.GOV
on the Balancing Rulebook developed by MEPSO, the electricity transmission system operator. The D-
REM team then met with the ERC to discuss the comments and feedback, as this rulebook is to be
approved by the ERC.
In parallel to its work with the ERC, D-REM continued working on the bylaws that should be adopted by
the GoNM and/or MoEcon. A set of bylaws related to renewable energy was prioritized due to the
deadlines for their adoption and to start the RE support scheme implementation. D-REM held regular
working sessions and several meetings with counterparts to discuss the nearly final draft text, including a
meeting with the deputy prime minister for economic affairs (DPMEA), who gave precise guidance on the
issues awaiting political decision. This set of bylaws was finalized at the end of January 2019.
During its February 5 session, the GoNM adopted the much-awaited Decree on RE Support Measures,
decisions for national mandatory targets for the share of RE in gross final energy consumption and in final
energy consumption in the transport sector, and the decision on the total installed capacity of preferential
producers. GoNM also adopted the Annual Program for Financial Support for the production of electricity
generated from preferential producers that use premiums (Program for Premiums). In light of this
development, the Ministry of Economy (MoEcon) will now move forward with a tender process for
granting preferential producers the right to use premiums. These bylaws and the Program for premiums
were drafted with technical assistance provided by D-REM. The remaining bylaw in the RE secondary
legislation – the Rulebook on RES – was revised by the Legislative Secretariat. After D-REM’s careful
review of the comments and proposals, and discussions with Legislative Secretariat representatives, a few
of the proposed revisions were incorporated in the final draft.
D-REM also finalized the draft decree on the operation of the newly organized electricity market operator
(Decree on MEMO), including its necessary technical, human and financial dimensions. It shared the draft
with the MoEcon and DPMEA for their review and feedback. During March 2019, the initial and revised
draft versions of the decree were the subject of discussion at several meetings of key stakeholders
(DPMEA, Macedonia electricity market operator (MEMO), MEPSO, ERC).
The team also continued to work on the Rulebook on exams for handlers of electrical appliances. The
first version was shared with the MoEcon at the end of March 2019.
D-REM team members met with the DPMEA and his team, the minister of transport and communication,
minister of labor and social policy, president of the ERC, and minister of economy and his team, to discuss
the program for vulnerable consumers. It was agreed that a working group will be established with the
DPMEA and respective ministries and D-REM representatives, and a final program developed. D-REM
prepared a brief elaboration of the concept for vulnerable consumers under the Energy Law, which the
MoEcon used in its sub-committee meetings with the European Union held in the first half of March 2019.
USAID.GOV USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT | 12
Image 1. Project team, MoEcon staff and DPMEA special advisor working on bylaws
D-REM provided input and feedback to the draft Rulebook on the Quality Control of Electricity that was
adopted by the MoEcon. The Natural Gas Supply Rules that were developed by D-REM and the Rulebook
on Licenses, to which D-REM provided feedback and comments, were adopted by the ERC.
The D-REM team met with the MoEcon to discuss the development and finalization of the oil-related
bylaws stemming from the Energy Law that are within the responsibility of the GoNM and MoEcon. It was
agreed that the decree on the quality of liquid fuels, rulebook on the quantity and the manner of calculating
operational reserves of crude oil, and rulebook on the minimum technical conditions for the premises for
storing crude oil, oil derivatives, biofuels or transportation fuels would be the main focus of work. To that
end, a D-REM consultant met with MoEcon to define the details of the work on this matter.
ACTIVITY: SUPPORT IMPLEMENTATION OF THE ENERGY LAW
ERC asked D-REM to review and comment on an amendment to the Electricity Supply Rules to implement
and establish a web-based platform where the customers could compare the terms (prices) offered by
electricity suppliers. After the document was reviewed by D-REM, it was submitted to USAID/North
Macedonia and the COR for recommendations on the web-based platform. On January 9, 2019, the ERC
held a preparatory session on this amendment (D-REM also prepared amendments related to the
contracts for prosumers that will be incorporated in the rules).
D-REM and the ERC reviewed and provided final comments on the MEPSO Compliance Program and
Rulebook on Compliance Officer, as one of the conditions of the MEPSO certification process. Based on
this feedback, MEPSO finalized these bylaws and submitted them to the ERC for approval. ERC approved
the bylaws during this quarter.
ERC requested that D-REM review the initial draft decision for certification of MEPSO as the electricity
transmission system operator. D-REM became involved in the certification process during March 2019.
ERC shared the draft decision with the EnC for their initial and unofficial review and received comments
and feedback. D-REM reviewed EnC’s comments and met with the ERC to discuss the draft decision. After
the decision’s text was finalized by ERC, it was officially submitted to the EnC Secretariat on March 27,
within the timeframe set by the Energy Law. It is expected that the EnC Secretariat will review and provide
feedback on the text of the draft decision in the next quarter.
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In its February 5 session, The GoNM adopted the Program for Premiums. D-REM helped the MoEcon
fine-tune the program and finalize the decision for launching the tender procedure for granting premiums.
Within this first tender, two state-owned locations for the construction of photovoltaic (PV) power plants
with a total installed capacity of 35 MW will be offered. An additional 27 MW installed capacity of PV
power plants to be constructed on private land will be tendered.
On February 27, 2019, the electronic auction for the selection of the universal electricity supplier was
held. The auction was organized in line with the new Energy Law in an open, transparent and competitive
manner. Both bidders (ESM Trade and EVN) that submitted initial bids participated in the e-auction. A
consortium of EVN Macedonia and EVN Supply won the tender by offering the lowest supply margin. The
official decision for nominating the universal supplier was adopted by the GoNM on March 5, 2019. With
this, North Macedonia became the first country in the EnC to select its universal supplier in an open and
competitive tendering procedure. D-REM supported creation of the legal basis for introduction of the
universal supplier as well as provided feedback and input to the tendering procedure. More specifically
during this quarter D-REM assisted the DPMEA cabinet in preparing the decision to award the contract
(i.e., select EVN as the universal supplier).
ACTIVITY: SUPPORT DRAFTING OF THE ENERGY EFFICIENCY (EE) LAW AND A PORTION OF
SECONDARY LEGISLATION
During Q2, D-REM reviewed stakeholder comments on the Draft Energy Efficiency Law that was published
on the electronic register (ENER). On February 20, 2019, the MoEcon, in collaboration with the
Macedonian Energy Association within the Chamber of Commerce, organized a public meeting on the
draft law. The meeting was attended by around 40 people from government institutions and energy
companies, energy auditors, and energy experts. D-REM provided support in gathering comments from
the public debate.
Based on the comments, the EBRD’s Regional Energy Efficiency Program (REEP) updated the draft law and
MoEcon shared it (version 3.2) with D-REM. The project’s comments were reviewed with the REEP team,
Energy Agency, and MoEcon representatives during working sessions organized by the MoEcon on March
21 – 23, 2019. Working meetings with the ministries of finance, transport, and communications were
organized to discuss the draft provisions (mainly on the energy services and ESCO contracts and on energy
performance and certification of buildings).
In addition, two meetings with ERC were held discuss the draft law provisions that introduce new
obligations and responsibilities for the ERC. Based on these sessions, REEP will develop version 3.3 of the
draft EE Law and share it with the MoEcon and D-REM. The MoEcon is planning to finalize the draft by
mid-May and submit it to the GoNM for adoption (the deadline for adoption has been postponed until
September 2019 in agreement with the EnC). Because REEP is the main drafter of the EE Law, D-REM’s
role is to provide feedback on the draft, while the ultimate responsibility for whether these will be
implemented in the EE Law lies with the REEP team.
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Figure 1: Participants at the Energy Efficiency Law public meeting
ACTIVITY: THIRD PROGRESS REPORT ON THE PROMOTION AND USE OF ENERGY FROM RENEWABLE
SOURCES
D-REM held several meetings with the energy expert from the Macedonian Academy of Sciences and Arts
(MANU) – the Research Center for Energy and Sustainable Development (RCESD) – and MoEcon staff
responsible for RES to determine the information that needs to be included in the report template.
MoEcon had begun working on the report based on D-REM guidance and input. In the first half of March
D-REM developed the first version of the report and gave it to the MoEcon for review and comment. D-
REM will finalize the report once MoEcon’s comments are received.
OTHER ACTIVITIES
During January 2019, D-REM was actively involved in the discussions and review of how the project and
its activities align with the new USAID “Journey to Self-Reliance (J2SR)” approach, which is a focus of
USAID/North Macedonia.
On February 12, 2019, D-REM’s project legal expert, USAID’s regional energy project manager, and the
World Bank Energy Team met on the Bank’s planned energy efficiency project and the establishment of
the associated EE Fund.
NEXT STEPS
• Continue to work on the bylaws deriving from the new Energy Law – during the next quarter.
• Meet on a regular basis with the ERC, MoEcon, and Deputy Prime Minister in Charge of
Economic Affairs (DPMEA) on the drafting of the bylaws within their respective responsibilities
– during the next quarter.
• Finalize the third progress report on the promotion and use of energy from renewable sources
– by end of April/early May 2019.
• Work with the REEP team and the MoEcon on the latest draft EE Law – planned for May 2019
(depending on agreement between MoEcon and REEP).
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• Prepare groundwork for the envisaged RE stakeholder forum – April/May 2019.
• Prepare groundwork for the envisaged training for journalists – April/May 2019.
ACTIVITY B. ENERGY EFFICIENCY, UTILITY MANAGEMENT, AND
ENVIRONMENTAL RESOURCE MANAGEMENT
TASK B1. UKRAINE TRANSMISSION SUBSTATIONS MODERNIZATION FEASIBILITY STUDY
PROGRESS TO DATE
The D-REM team submitted final versions of its pre-feasibility study (PFS) and environmental and social
due diligence (ESDD) to Ukrenergo on schedule. However, due to the late submission of comments from
Ukrenergo (received five weeks after the due date on October 31, 2018) and the substantial changes they
required, the project has encountered delays. While the finalization of Component A (Pre-Feasibility Study
(PFS)) was scheduled for November 10, 2018, its closing occurred on February 28, 2019.
Ukrenergo commented that the estimated general project cost of €162.5 million will exceed their
expected project budget of €149 million and requested that an internally provided cost cap be used in the
PFS process. This is not consistent with the PFS process per D-REM’s ToR to its subcontractor as agreed
to in the inception meeting. Consequently, D-REM sent its analysis of comments to Ukrenergo on January
16, 2019 based upon original requirements of the ToR. A follow-up meeting between the D-REM team
and Ukrenergo on the submitted PFS and Ukrenergo’s comments was held on January 25, 2019.
At the meeting, the D-REM team stated that if the scope of the rehabilitation were to include all the
elements added by Ukrenergo in their comments to the PFS, that the budget estimate would increase by
approximately €15 to €22 million. D-REM then proposed that a new price estimate be based upon the
final list of components set at this meeting. The opportunities to save costs come from the updated budget
based upon the final list of components, the review and possible reduction of prices on 765 kV power
transformers, phase shifting transformers and disconnectors, and not replacing some high-cost
components that are still able to operate for some years. For example, some of the power transformers
could be retained (the cost of power transformer replacement is approximately €44 million). D-REM
worked with the local team to consolidate the final components/quantities list as agreed at the Ukrenergo
meeting.
The D-REM team reviewed the PFS report in accordance with the final definition of the scope and
components of the rehabilitation of the 12 substations; analyzed the technologies and other solutions
proposed by Ukrenergo to help reduce costs, reviewed the estimates of costs per elements, and
incorporated the provision of main guidelines to help define the tendering strategy to maximize the scope
of the rehabilitation within the available financial resources.
The final version of the PFS report was completed, with the English version delivered on February 26,
2019, and the Ukrainian version on February 28, 2019.
After the final schemes and elements of the substations’ rehabilitation were defined, activities on
Component B (Environmental and Social Due Diligence or ESDD) were resumed; the final version of
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Component B was submitted on March 6, 2019. EBRD advised that they have comments and are in the
process of incorporating them into the Final ESDD.
Now that Component A has been completed and closed, activities on Component C (Technical and
Economic Feasibility Assessment, or TEO) have resumed. However, it has been a complex process due
to the need to reassemble the local team after approximately four months of low activity. The
reorganization of the local team and evaluation of the final scheme and components of the rehabilitation
are under analysis in order to optimize the effective re-initiation of the design works.
Status at the end of Q2:
• Component A: Completed (100%)
• Component B: Pending receipt and incorporation of the final comments by EBRD and delivery
of the final ESDD version. Estimated progress is at 98%
• Component C: As of March 31, 2019, an advance of 77% is estimated.
• Consultancy resources as of March 31:
− The agreed 452 days of international inputs for consultancy services have been exhausted.
− The national inputs for consultancy services have a balance of 32 days pending.
− The balance of consultant inputs (32 days of national inputs) seems too short for the pending
tasks. The consultants are helping Ukrenergo find the best way to achieve its targets within the
agreed resources and budget.
NEXT STEPS
• Implement final comments on the ESDD once received – April 2019
• Submit final ESDD. Obtain approval by all the parties of the Minutes of Delivery of the final
version of ESDD and closure of Component B – April 2019.
• Continue activities for Component C (TEO) and submit final TEO for approval – June 2019.
TASK B2. PERFORMANCE IMPROVEMENTS FOR THE NATIONAL ELECTRIC DISTRIBUTION
NETWORK IN ALBANIA
PROGRESS TO DATE
Improved Reading and Billing
D-REM advisors are monitoring the ongoing customer mapping process, which includes a customer data
clean-up activity. They met with HQ and regional managers responsible for the reading and billing process,
to coordinate with them in implementing an improved reading process, which will include the inputs of
both parties. This will require updating the customer relationship management (CRM) system with the
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new mapping data provided from the regions and uploading them into the new system as soon as possible.
The new reading and billing process began implementation in Zone 3 of Shkodra region in February 2019
and will continue as a pilot until the CRM system is updated with the new customer mapping data, before
rolling it out to the rest of Shkodra region.
Revisit/Restructure Reading
Advisors developed the plan for feeder-based reading and presented it to OSHEE, who began preparing
for the next meter reading cycle based on the new processes and structures for conducting readings for
one feeder in one day. This plan should improve the energy balancing and leave more time for commercial
operations (e.g., collections, meter inspections, disconnections).
The revised meter reading structure was piloted in Zone 3 of Shkodra region, where about 80% of the
mapping process was completed compared to 64% at the regional level. D-REM then began preparing to
implement the reading of customer meters based on the one feeder in one day process. This has shortened
the region’s extended reading schedule from eight days to five. With the new reading approach there
typically is one-meter reader assigned per feeder. The actual number of readers assigned is based on the
number of the customers and the terrain of the feeder so that it is possible to complete each feeder’s
readings in one day.
The overall trend for Aggregate Technical, Commercial, and Collections Loss (ATC&C) losses has been
decreasing over time due to better management oversight but the rate of losses being consistently over
30% (with this point only being attained for one month from the 2015-2019, is still far above the average
for EU distribution companies.
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The first pilot trial of the revised process was completed in February, with only minor issues. D-REM
resolved these issues by facilitating communications between the HQ director for reading and metering
and regional employees. The D-REM team is closely monitoring the process with the region’s management
and will continue to improve the process using input from the region’s management and cooperation with
HQ, before it will be rolled out to the entire region.
During a field visit to Dajç village of Lezha (Zone 1) to monitor the reading process, it was discovered
that readers could not read all their customers’ meters or take pictures of readings with their handheld
unit. Instead, they would rely on colleagues to take pictures of the meters with their smart phones, and
then transfer the data to the handheld unit. Thus, the reading process needs to be revised based on the
D-REM’ proposed one feeder a day plan.
Identify Zero Bills
Some bills report zero electricity consumption. The causes were
due in part to not having access to customer premises to read
the meter or that the meter or premises could not be found. All
of these zero reading bills are now being grouped based on
customer category, with priority given to commercial customers
and meters in collective boxes, as these meters can be more
easily be inspected and verified. During the February reading
process, the number of zero bills increased in Shkodra region to
approximately 11,000 customers. This was increase was because
the new CRM system, included customers who previously were
excluded from the reading process. This issue was escalated to
HQ management and is being addressed.
Improve Revenue Protection and Control/Institutionalize
Operational Audit and Revenue Protection Units/ Strengthen
Internal Controls
D-REM formalized the establishment of the Loss Control & Recovery Department, which consists of a
department manager in OSHEE HQ reporting directly to the managing director, and regional heads located
in each of OSHEE region. D-REM supported completion of the first round of recruitment process for the
Loss Control and Recovery Department. 106 employees have been interviewed and tested for analysts
and field control positions, and successful candidates shortlisted for recruitment. The first twenty recruits
of LCRD commenced began inspection work in Shkodra region. They detected over ten cases of electricity
theft in two days and reported them to the police.
Figure 2: D-REM advisor inspecting zero bills
reported from meters in collective boxes
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Figure 3: Testing and interviewing candidates for LCRD positions
Figure 4: Theft of electricity case detected from LCRD control teams, Police assistance required to access the premises.
D-REM monitored meter inspections for electricity theft in Zone 4 (Shkodra city). There, the inspection
team identified a customer connected illegally to the network and reported him to the police for further
criminal proceedings for theft of electricity.
D-REM inspected feeders with high losses in Zone 1 (Lezha) and Zone 6 (Puke) of Shkodra region,
selecting feeders with high losses but only a few customers. In Zone 1, feeders Fabrika Tullave 2 and
Hidrovor Kabllor Tale were selected. It was discovered that the Fabrica e Tullave 2 (brick factory) feeder
meter was not working and the connection was supplying a fourth commercial customer (only three were
listed in the system). Feeder 2 at Hidrovor Kabllor Tale was found to be connected to an additional
commercial customer, who was consuming energy from another source, Feeder #19. The consumed
energy was not registered as billed kWh under Feeder #19, but registered under Feeder #7, which could
explain the 45%-54% losses on Feeder #1.
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In Zone 6 (Puke), D-REM investigated feeder ‘Lak Rroshi,” supplied from Tuc substation in Puke, which
had 65% losses with only 36 customers supplied from 2 (two) distribution transformers, 35 household
customers, and one commercial customer (Minw) with its own dedicated distribution transformer. D-
REM visited all customers on this feeder and read their meters. It found that only 4 families out of 34
household customers were living in their homes and that the mining complex has been closed for the past
three years. The feeder meter coefficient at the substation and the meter at the mining complex are based
on peak load. Since the energy consumed in the feeder and the mining complex is very low, the meters
cannot measure the energy.
Overall collection improvements have been made by OSHEE over time but had begun to flatten out as
the simplest fixes to this issue have already been taken. The project has contributed to overall
improvement in collections and specifically has the current results trending back up as described in this
section of this report.
Introduce Performance Management System
In addition to the initial skill assessment performed by D-REM, the project established a baseline of
Shkodra region zone employees’ capabilities. It will conduct individual performance assessments for each
feeder team on a monthly and quarterly basis. D-REM will also assess commercial losses on the feeder,
number of customer meters read, collection and billing efficiency, and payment response rate. This
performance management system will help to increase staff effectiveness, decrease losses, and improve
billing and collection.
D-REM conducted performance appraisals for feeder team leads, process administrators and data analysts
in each zone of the Shkodra region. Feeder performance was reviewed to understand the reasons for
21 | USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT USAID.GOV
losses in each feeder. All employees were informed that the first quarter evaluations will be conducted
after March and disciplinary measures will be taken for any underperforming employee.
Introduce Employee Incentives
D-REM will propose a new incentive scheme for employees who meet or exceed their targets, in the form
of a bonus (e.g. 5% to 10% of their base salary). This number will depend on the target and approval of
senior management. It has been agreed with the head of the Trade Division in OSHEE that Shkodra region
will receive from HQ separate targets for each zone and feeder. This will enable D-REM to identify
employees who have met or exceeded their targets and should be eligible for incentives based on the new
policy.
OHSEE management is considering the option of providing one-month bonuses as incentives to technical
employees in Zone 4 of Shkodra region, who performed meter relocation very well and thus helped
decrease commercial losses.
Align Organizational Structure
Since May 2018, Shkodra region has mirrored the new organization structure, which separates the
operations of the regions based on the distribution network (e.g., substations) into seven service zones.
However, this organization structure has not been formalized, since the region continues to have the old
structure and is separated into four units. D-REM discussed and agreed with the OSHEE Chief of Staff and
managing director to formalize the new organization structure and provide employment agreements based
on the positions contained in the new structure.
Define Titles and Document Job Descriptions
D-REM submitted job description for key field employees, such as feeder team leads, readers, electricians,
and data analysts. It is expected that those job descriptions will be approved and signed by the managing
director and HR Department and then issued to field employees for their acceptance.
Work Load Management/Decentralize Decision-Making Processes
D-REM has continuously encouraged regional staff to be pro-active and not to depend on analyses and
instructions provided by OSHEE HQ. Instead, they should do their own customer analysis and take
responsibility for working with their customers and decreasing losses, and not to wait for plans to be
drafted in Tirana.
Improve Managerial and Delivery Capability
D-REM made recommendations and provided hands-on support to management and field employees
during their site visits, coaching them on best practices to complete their tasks.
Shift Cultural Paradigm
This is an ongoing task that will result in behavior change and a stricter discipline through performance
management and field monitoring.
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Strict Disconnections
In January 2019, D-REM inspected and monitored disconnection teams in Zone 1 (Lezha city and Shengjin
coast city) to ensure disconnection efficiency, that all customers in default were addressed, and that
debtors were grouped by feeder. In Lezha and Shengjin the disconnection process was implemented
pursuant to the list and plan. However, the disconnection list comprised customers who only had not paid
three invoices and had insignificant actual debt. In fact, there should have been no disconnection in this
coastal city at this time because there are essentially no customers in residence in most locations during
this time of the year, so these disconnections will not impact collections income. D-REM instructed
process administrators to generate their own disconnection lists in the zone and to prioritize large
debtors, (commercial and household) for disconnection. This change will improve the potential to
significantly increase collection results in the zone.
In February 2019, D-REM inspected and monitored disconnection teams in Zone 1 in Lezha and Zone 4
in Shkodra. In Shkodra, 5,002 debtor customers have been disconnected for non-payment of electricity
for the first quarter of 2019.
Figure 5: D-REM advisors monitoring inspection and disconnection process in Lezha and Shkodra
23 | USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT USAID.GOV
Update Infrastructure Data
The mapping and data collection progress has been ongoing since June 2018. The overall assessment for
OSHEE is that this effort continues to be behind schedule. The reported percentage completed varies by
region and by feeder within regions. In the Shkodra the completion rate is reported to be just over 70
percent, which is still behind other regions. However, D-REM was told by the Trade Division that none
of the updates and mappings recorded so far have been registered into the new system, so this percentage
may not be a true indication of progress.
Improve System Access
Awaiting completion of feeder and customer mapping and data collection by OSHEE.
Reinforce the Legal Function
Another key performance indicator for feeder teams and the new loss control and recovery teams will
be the number of electricity theft cases discovered and reported to law enforcement. These cases will be
recorded and followed up through the courts to ensure proper and successful prosecution. Based on the
new standard operating procedure for LCRD, drafted by D-REM, the details for each case of electricity
theft should be forwarded to the Legal Office, which will keep track of the cases and follow up on the
status with the prosecutor and court.
D-REM also suggested that when customers are reported to the police and arrested for electricity theft,
the cases be routed through OSHEE’s public relations office to the local media and published to serve as
a deterrent for the public.
Improve Metering Infrastructure
D-REM visited multiple locations with poor network conditions. These areas have simple steel wires,
which are vulnerable to illegal connections and breaks during harsh weather. This problem had occurred
at the site that D-REM advisors visited, and OSHEE technical employees were conducting repairs. Poles
must be replaced and aerial bundled cables (ABC) installed (ABC cables are insulated and bundled to
prevent illegal connections and reduce both commercial and technical losses).
Improve Meter Connection Data
Awaiting completion of feeder and customer mapping and data collection by OSHEE, to enable full
functional operation of the new CRM system.
Relocate Meter Points
D-REM’s provided recommendations and instructions to the Shkodra regional director, who has now
directed that all meters to be replaced through recent and future network investment should be relocated
to a location outside of the customer’s premises that is accessible to OSHEE employee.
At this time meter relocation activities have been implemented mainly in Zone 4 of the Shkodra region.
All other zones have been ordered to intensify relocation activities, since they have a direct impact on
loss improvement and increased collections. The results show that the monthly average consumption of
USAID.GOV USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT | 24
customers there rose from 150 kWh before the relocation to over 500 kWh after relocation, implying
that they were using secondary lines to steal electricity. So far, 896 meters have been relocated.
Images 8 and 9. Relocation of meter points to the border of customer premises.
Install Balance Metering
D-REM provided a draft budget justification and estimation together with technical specifications for
distribution transformer balance meters. At the same time, instruction has been given to verify the
condition of existing balance meters and identify the exact need for new ones. The regional head of
distribution submitted a request to OSHEE HQ for new electronic meters, which will be installed as
balance meters and will replace existing obsolete and inductive meters.
Cable Detection
D-REM provided a draft budget justification and estimation for cable detection devices. With the
functionalization of the new Loss Control & Recovery Department, OSHEE will need to equip the
inspection teams with proper tools, including specialized equipment to detect illegal cable connections.
NEXT STEPS
• Conduct Q2 performance appraisal for employees in Shkodra region- late April - early May 2019
• Finalize training modules and conduct training for LCRD employees once the department
completes the recruitment process – mid May 2019
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• Implement community outreach activities by meeting with municipal representatives and
communities with feuding difficulties (that refuse to pay for electricity), and where OSHEE
employees have no direct access to customer meters - late May – early June 2019
• Continue revenue protection activities field inspections of meter points - April – June 2019
• Prepare reading and overdue customers disconnection policy draft – May 2019
• Prepare draft of MOU between Police and OSHEE for management review – May 2019
• Conduct trainings for field employees – June 2019
TASK B3. USAID SERBIA ENERGY EFFICIENCY ACTIVITY (SEEA) (MISSION BUY-IN)
PROGRESS TO DATE
The Serbia Energy Efficiency Assessment (SEEA) team visited the ten selected municipalities/district heating
companies (DHCs) and filed its field mission trip report.
Per USAID/Serbia’s guidance, the SEEA team prepared an Activity 2 report on the selection of three
DHCs for detailed assessment for USAID review and approval prior to the selection of the three sites.
Additional preliminary technical calculations on energy savings were shared with USAID/Serbia.
USAID/Serbia selected the final three candidate DHCs (Nis, Pancevo and Cacak) on February 21, 2019,
at which point Activity 3 (Engineering Assessments) commenced.
From February 12 - 15, 2019, Daniel Berg (of E3, subcontractor) travelled to Serbia (Belgrade, Jagodina
and Vojvodina) to meet with commercial banks and investors. Robert Russo (of E3, subcontractor)
travelled to begin the engineering team work, including meetings with team engineers, SCADA system
vendors, biomass boiler manufacturers and pre-insulated pipe vendors from February 23 - March 1, 2019.
He also attended the energy fair in Vojvodina to learn more about UNEP’s district heating program in
Belgrade and meet with local vendors and engineering firms that would be potential bidders for the pilot
projects.
Baseline heat load duration curves were completed for Nis, Cacak and Pancevo, for both the entire system
and network branches/substations impacted by proposed projects. Solar collector thermal analyses and
design calculations were completed for Pancevo. The team identified local solar panel
vendors/contractors. The biomass boiler conceptual design was completed for Nis. While USAID has
decided not to consider biomass boilers as part of the pilot project tendering, the conceptual design will
be submitted to Nis management, should they wish to issue a tender. During the week of March 18, 2019,
D-REM hosted site visits for Andrew Popelka, ACOR, USAID/Washington and Sinisa Cadjo, Project
Management Specialist, USAID/Serbia to Nis, Cacak and Pancevo for Popelka and Cadjo.
NEXT STEPS
• Develop draft Phase 1 report including conceptual design details – end of April 2019
• Present preliminary Phase 1 results to USAID – end of April 2019
• Develop detailed tender specifications and equipment lists for each project – end of April 2019
USAID.GOV USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT | 26
• Develop and sign MoU with each DHC detailing the level of costs sharing and support to be
provided during tendering and project implementation – April – May 2019
• Prepare tender documentation for each project – May 2019
• Prepare work scope and budget for Phase 2 – May 2019.
TASK B4. MODERNIZATION PROGRAM FOR ESM (ELEM) (MACEDONIA)
PROGRESS TO DATE
During Q2, USAID approved the scope of work for the ESM (ELEM) Modernization activity in Macedonia
as a separate activity under D-REM. After signing a non-disclosure agreement (NDA), D-REM submitted
a data request and shared a suggested report outline showing a structure and potential content for ESM.
Resourcing for this activity is nearly finalized, and we expect that the team be deployed in early May to
imitate this activity. The team will consist of a thermal generation advisor, financial advisors, coal mining
experts, and hydropower, energy trading, and IT specialists.
NEXT STEPS
• Finalize resourcing of the implementation team.
• Translate information from ESM in response to D-REM’s request.
• Hold a kick-off meeting with USAID/Washington and USAID/Macedonia.
TASK B5. ENERGY MANAGEMENT SYSTEM DEMONSTRATION (WEST BALKAN
COUNTRIES)
In March USAID sent a request to Tetra Tech to develop a new activity under D-REM, focused on the
introduction of energy management systems (EnMS) and practices in industrial facilities throughout
Southeast Europe. The goal of the project is to demonstrate long-term improvements in corporate
financial performance resulting from the use of EnMS systems. The focus countries are Albania, BiH,
Kosovo, Macedonia, and Serbia.
NEXT STEPS
• Submit a draft work plan for discussion to USAID – early April 2019
• Based on discussion of the draft concept and resourcing, prepare and submit EnMS budget for
USAID approval – mid April 2019
• Upon USAID approval, finalize team composition and start implementation – later April – early
March 2019
TASK B6. PROCUREMENT ASSISTANCE FOR KEK (KOSOVO)
PROGRESS TO DATE
USAID provided approval to commence the activity in support of the procurement assistance to
Korporata Energjetike e Kosovës (KEK) on March 28, 2019.
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The activity will principally support KEK in designing, implementing and monitoring procurements for large
capital investments in its mines, to ensure that they meet international standards for transparency and
value for money. Resourcing for this activity is underway, with the local legal and administrative/technical
specialist and Senior Legal Advisor approved by USAID. Efforts are also underway to identify the
International Procurement Expert, who should be deployed in May. In terms of on the ground activities,
we anticipate that data collection and a situational assessment will be initiated by mid-April pending final
discussions with KEK.
NEXT STEPS
• Pending further agreement with KEK, the local legal and technical/administrative specialist will
begin data collection and prepare a situational assessment.
• Finalize the selection of the international procurement advisor and deploy in May.
• Formal kick-off of the activity on deployment of the international procurement advisor. The
Senior Legal Advisor may also attend the kick-off meeting if needed.
TASK B7. APPROACH TO DEAL WITH THE NORTHERN KOSOVO ELECTRICITY SUPPLY
AND DISTRIBUTION CHALLENGE
On January 31, 2019, Tetra Tech submitted the concept paper for this task to the COR. The concept
approach was based on expectation that KEDS (Kosovo’s distribution company) will normalize its
distribution operations issue contractually. However, it is also possible that KEDS may want to be more
involved in distribution system operational support in Northern Kosovo. Tetra Tech’s recommended
approach is for one of its senior staff to travel to Kosovo for two or three days to meet with the
USAID/Kosovo Mission and stakeholders (KEK, KOSTT and KEDS) to discuss a proposed the details of
the earlier proposed SOW for USAID input regarding the best approach to address the northern Kosovo
electricity supply and distribution challenge.
NEXT STEPS
• Circulate the updated concept note to USAID – April 2019
TASK B8. DEVELOP AN INVESTMENT/TRANSACTIONAL IMPLEMENTATION PLAN TO
UNLOCK ADDITIONAL ENERGY RESOURCES FOR GEORIGIA (GEORGIA)
PROGRESS TO DATE
USAID approved D-REM’s request to move forward with this task. Tetra Tech will now prepare a
preliminary shortlist of viable hydropower projects (HPPs) under development in Georgia that have been
stalled, identify why they have stalled (technical, legal, financial, environmental, political, social/community,
etc.) and prepare a high-level roadmap of required activities (e.g., transactions advisory, legal/regulatory
review). The task’s duration is three months.
The lead subcontractor for this task will be supported by Phil Hoover, Hydropower Advisor (H&M) and
Mamuka Kikalishvili, Local Hydro Specialist (Global Utility Solutions (GUS).
NEXT STEPS
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• Resolve the issue of approval for Tetra Tech IMC or retain another subcontractor based on an
expedited competitive procurement process – April 2019.
ACTIVITY C. REGIONAL ENERGY PLANNING, TRADE, AND
ENERGY SECURITY
TASK C1. RUSSIAN ENERGY SECTOR INFLUENCE STUDY (GEORGIA PILOT)
PROGRESS TO DATE
During Q2, USAID’s COR gave technical approval to move forward with the Russian Energy Sector
Influence Study, which will be implemented through a pilot project in Georgia. The sources of influence
would be Russian Federation (RF) public and private companies, government bodies, and NGOs that are
intending to influence decision making in Georgia’s energy sector (e.g., procurement, privatization, major
infrastructure development decisions). D-REM will provide an overview of Georgia’s energy sector,
explaining its relevant recent developments and current strategies, and analyze and summarize all potential
RF sources of influence on the sector.
This activity will be implemented through a desk study and field visits. The desk study will include summary
information on the national energy sector of Georgia and stakeholders associated with it. Data collection
will rely on major international sources (e.g., World Bank reports), internal project team interviews and
reports, and company databases. Based on the preliminary findings of the desk study and to help validate
its completeness and accuracy, the team will undertake a field study that will include one-on-one
interviews, reviewing available documents, and collecting information from business and personal
networks.
The duration of this task is three months. The lead subcontractor for this activity is supported Mamuka
Kikalishvili, Local Hydro Specialist (Global Utility Solutions (GUS).
NEXT STEPS
• Resolve the issue of approval for Tetra Tech IMC or retain another subcontractor based on an
expedited competitive procurement process – April 2019.
TASK C2. U.S. – EUROPE ENERGY BRIDGE WEBSITE
PROGRESS TO DATE
In January 2019, D-REM met with RESA implementing partners to discuss website content and target
audience(s), the possibility of conducting a focus group, options for a “matchmaking” function on the
website, and roles and responsibilities for providing, reviewing and posting content.
D-REM collected feedback from NARUC (the National Association of Regulatory Utility Commissioners)
and USEA (United States Energy Association) via email and prepared a specific list of questions to guide
discussions with each group. On January 15, D-REM met with USEA to continue to develop the RESA
website. It was determined that a focus group would be useful to guide the process. Thus, USEA will select
29 | USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT USAID.GOV
some U.S. businesses from within their membership to participate. On January 28, D-REM hosted a one-
on-one conversation with Habitat for Humanity on gathering additional information and the Phase 2
buildout. Notes from all meetings have been synthesized and communicated to USAID. D-REM prepared
a draft focus group concept paper, as well as a draft schedule for Phase 2 and is incorporating comments
from USAID.
On February 8, 2019, D-REM received a website mockup from USAID that revised the website structure
and design to substitute country tabs with a fully regional and thematic approach. The project subsequently
produced a website development document based on the mockup and delivered to USAID on February
11. The final document will serve as a blueprint for the web developer and be used to help guide the
decision-making process for content and functionality. Based upon USAID’s guidance, D-REM
incorporated changes and focused on videos, graphics and images.
On March 1, 2019 Tetra Tech delivered an indicative scope of work and estimated budget to produce up
to three videos for the Energy Bridge website and presented this to USAID within the larger scope of the
Phase 2 buildout. Also, in March, D-REM was instructed to pause work on the website until further notice.
Therefore, the development of the website will continue once advised by USAID.
NEXT STEPS
• Remain ready to assist USAID with messaging, audience identification, and overall strategic
counsel regarding the purpose and goals for the website.
• Maintain channels of communication with implementing partners to ensure engagement with the
process.
• Prepare an RFP package for procuring videography services for the related videos.
USAID.GOV USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT | 34
ANNEX A. REPORTING ON INDICATORS
D-REM TASK A1. SUPPORTING ENERGY LAW REFORM IN MACEDONIA
EG.7.3 Energy Policy and Institutions
EG.7.3-1 Number of laws, policies, regulations, or standards to enhance energy sector governance
formally proposed, adopted, or implemented as supported by USG assistance
January – March 2019 – the following laws, policies, regulations, or standards were supported and
adopted, which were not previously reported:
1. Rulebook on quality control of electricity
2. Rulebook on the authorizations, rights and obligations of the compliance officer in the electricity
transmission system operator
3. Annual program for financial support for renewable energy generation by preferential producers
using premiums
4. Rulebook on licenses
35 | USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT USAID.GOV
PERFORMANCE MONITORING TABLE – MACEDONIA
# Indicator and
Measurement Indicator definition
Source /
Frequency Disaggregates
Baseline
/ Year
Year 1
Target
2018
Year 1
Result
2018
Year 2
Target
2019
Q2
Result
2019
Year 3
Target
2020
LOP
Target
Result to
Date
1*
Number of laws, policies,
regulations or standards to
enhance energy sector governance formally
proposed adopted or
implemented as supported by
USG assistance*
All laws, bylaws, policy papers, regulations,
standards, rulebooks, decrees, strategies,
that enhance energy sector governance,
drafted with Project technical assistance,
formally proposed, adopted or implemented
by relevant Government of Macedonia
institutions.
Documents
and reports,
Official
Gazette,
Government
Ministries /
quarterly
Proposed
Adopted
Implemented
0 18 21 9 4 3 30 25
2
Number of energy tools,
methodologies, analyses,
assessments and reports
developed, submitted,
adopted, and/or implemented
All energy tools, methodologies, analyses,
assessments and reports developed with
Project technical assistance, submitted to,
adopted or implemented by relevant
Government of Macedonia institutions.
Documents
and reports /
quarterly
Submitted
Adopted
Implemented
0 5 5 2 2 1 8 7
3 Liberalization of the electricity
market in percentages
Share of electricity purchased on the
liberalized electricity market in gross
electricity consumption in Macedonia.
Energy
Regulatory
Commission/
annually
47%
2016 55% TBD 65%
75% 75% TBD
* This indicator is standard USAID foreign assistance indicator EG 7.3-1, and it relates to the assistance provided by the USG through Supporting Energy Law Reform in
Macedonia (USAID D-REM subtask)
1 | USAID DEVELOPMENT OF REGIONAL ENERGY MARKETS – Q2 REPORT USAID.GOV
D-REM TASK B2. PERFOMANCE IMPROVEMENTS FOR THE NATIONAL ELECTRIC
DISTRIBUTION NETWORK IN ALBANIA
EG.7.3 Energy Policy and Institutions
EG.7.3-1 Number of laws, policies, regulations, or standards to enhance energy sector governance
formally proposed, adopted, or implemented as supported by USG assistance
January – March 2019 – the following laws, policies, regulations, or standards were supported:
• Job Description for HQ Manager of LCRD
• Job Description for Regional Head of LCRD
• Job Description for Field Inspection Employees of LCRD
• Job Description for Data Analyst of LCRD
• Draft Standard Operating Procedure of LCRD
• Reporting templates of LCRD
• Training Module for Revenue Protection Activities
EG.7.3-2 Number of people trained in technical energy fields supported by USG assistance
January – March 2019:
Category of Aggregation / Disaggregation
FY19
Q2
Total to
Date
Number of people trained in technical energy fields
supported by USG assistance 60 60
Number of men 47 47
Number of women 13 13
Person hours of training men 59 59
Person hours of training women 17 17
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