200 M. HOCHBERG
Additional Opportunities Within the Updated Sector Structure
Egypt is taking the requisite steps to accommodate the increased competition contemplated in the Electricity Law, as well as laying the foundations for the eventual introduction of a highly competitive electricity
market structure complete with markets for bilateral contacts, spot trade,
balancing and a host of ancillary services. Importantly, the Electricity
Law legally separates the EETC from the EEHC, making the EETC
the independent system and market operator, and paving the way for
non-discriminatory third-party access (TPA) to electricity network infrastructure, a precondition of competition in wholesale and retail electricity
markets. 54
TPA is critical to mitigate conflicts of interest between the grid operator and the companies that use the grid, making the EETC an impartial
entity with respect to its treatment of market participants. The Electricity Law also increases the authority, independence and transparency of
the energy regulator (EgyptERA), another key precondition of competition. The unbundling of transmission and the EETC’s new role as the
independent transmission system operator combined with an increasingly
transparent regulator will help provide private sector generators, including
renewable energy generators, confidence that they will be able to access
the grid to transport power.
Under the Electricity Law, the EETC operates both the competitive market and the traditional regulated market. Within the competitive
market qualifying high-voltage customers, which account for 16% of the
nation’s electricity consumption, purchase electricity directly from generators or electricity marketers, who then pay a transmission wheeling charge
to the EETC for the use of the transmission system. In the regulated
market, the EETC acts as a clearinghouse between the generators and
the distribution companies, matching supply from the generators with
demand from the distribution companies who serve customer within their
service territories under regulated tariffs.
Bilateral Contracts and Retail Choice
Within this structure, direct contractual negotiations for power supply
deals are permitted between qualified customers (which are large electricity consumers) and eligible load serving entities (LSEs). LSEs serve
Additional Opportunities Within the Updated Sector Structure
Egypt is taking the requisite steps to accommodate the increased competition contemplated in the Electricity Law, as well as laying the foundations for the eventual introduction of a highly competitive electricity
market structure complete with markets for bilateral contacts, spot trade,
balancing and a host of ancillary services. Importantly, the Electricity
Law legally separates the EETC from the EEHC, making the EETC
the independent system and market operator, and paving the way for
non-discriminatory third-party access (TPA) to electricity network infrastructure, a precondition of competition in wholesale and retail electricity
markets. 54
TPA is critical to mitigate conflicts of interest between the grid operator and the companies that use the grid, making the EETC an impartial
entity with respect to its treatment of market participants. The Electricity Law also increases the authority, independence and transparency of
the energy regulator (EgyptERA), another key precondition of competition. The unbundling of transmission and the EETC’s new role as the
independent transmission system operator combined with an increasingly
transparent regulator will help provide private sector generators, including
renewable energy generators, confidence that they will be able to access
the grid to transport power.
Under the Electricity Law, the EETC operates both the competitive market and the traditional regulated market. Within the competitive
market qualifying high-voltage customers, which account for 16% of the
nation’s electricity consumption, purchase electricity directly from generators or electricity marketers, who then pay a transmission wheeling charge
to the EETC for the use of the transmission system. In the regulated
market, the EETC acts as a clearinghouse between the generators and
the distribution companies, matching supply from the generators with
demand from the distribution companies who serve customer within their
service territories under regulated tariffs.
Bilateral Contracts and Retail Choice
Within this structure, direct contractual negotiations for power supply
deals are permitted between qualified customers (which are large electricity consumers) and eligible load serving entities (LSEs). LSEs serve