Improving competition in the Cypriot electricity market

Improving competition in the Cypriot electricity market

Although the electricity market in Cyprus has already been liberalised, with the possibility of multiple generation and retail supply firms operating in a competitive market, the Electricity Authority of Cyprus (EAC) has held nearly 100% of retail supply and over 90% of generation.

With the aim of opening the market to new entrants, Cyprus has been working on reorganizing the electricity market arrangements. The Cyprus Transmission System Operator (TSO) developed the Trading and Settlement Rules (TSR) to serve as the detailed market rules for this reorganised market.

Setting the necessary parameters

The energy market regulator, Cyprus Energy Regulatory Authority (CERA), asked Frontier Economics to support their approval of the TSR and help determine various parameters required by law.

We helped conduct a detailed review of the TSR, suggested changes to the rules, and informed CERA’s response to various issues. We assisted the development of the economic framework and key principles underlying the various parameters in the TSR that CERA was required to set by:

  1. Reviewing the definition of the parameter in the TSR and other market regulations;
  2. Identifying relevant principles in European legislation and Network Codes;
  3. Identifying relevant experience from other jurisdictions; and
  4. Drawing conclusions for the Cyprus marketDuring the process, we supported CERA in the identification of the information needed to effectively monitor the market and in the approval of market manuals. We also advised on issues raised as part of implementing the various rules, and subsequent changes to procedures and parameters.

Effective monitoring

During the process, we supported CERA in the identification of the information needed to effectively monitor the market and in the approval of market manuals. We also advised on issues raised as part of implementing the various rules, and subsequent changes to procedures and parameters.