development of regional energy markets for europe …

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


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


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;


• 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.


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.


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)


• 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


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.


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.


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.


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).


• 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


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


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.


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


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.


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


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.


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


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


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


• 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


• 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.


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


• 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


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.


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


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)


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