What Energy Law Regulates
The foundation of energy law in Georgia is the Law on Electric Power and Water Supply, which establishes the general legal framework for generation, transmission, distribution, supply and trade in the electricity sector, and for transmission, distribution, supply, storage and trade in the natural gas sector. Its purpose is the creation, opening, development and integration of well-functioning, transparent and competitive electricity and natural gas markets. The law governs the management and organization, regulation, monitoring and supervision of these sectors, free access to the markets and questions connected with cross-border trade. It also creates the legal framework for implementing the requirements of the corresponding legal acts of the European Union and protects supply security — both at the level of policy and at the level of market participants' obligations.
The Boundaries of the Law's Application
It is important to know where the law does not reach. Its application does not extend to the exploration, extraction and processing of natural gas and other hydrocarbons, the sale of natural gas through vehicle gas-filling stations, the sale of electricity through electric-vehicle charging points, and the production of gas products — except where processing within liquefied natural gas devices is concerned. Separately excluded are the relations arising from the intergovernmental agreement between Georgia and Azerbaijan concerning the transit, transportation and sale of natural gas through the South Caucasus pipeline system. Water supply has its own boundary too: the law does not apply to the abstraction or extraction of water from a surface or underground object.
The General Regulatory Principles
The organization, regulation and monitoring of energy activity rest on core principles: the safety and reliability of the operation of the electricity and natural gas systems and of the related services; the safe supply of electricity and natural gas to consumers; unrestricted access to the systems and the effective exercise of the right to change supplier; competition, transparency, non-discrimination and legal certainty in every type of activity; the independence of transmission and distribution from other energy activities and related commercial interests, together with the exclusion of conflicts of interest and cross-subsidization; increased efficiency and sustainable development in line with environmental, economic and social security policy; the promotion of smart and environmentally safe technologies; the encouragement of cross-border flows through clearly defined, transparent and non-discriminatory instruments; the protection of the rights and lawful interests of market participants and final consumers; and the assurance of the physical and financial accessibility of electricity and natural gas.
What Counts as Energy Activity
The law describes precisely what falls within the concept. Electricity activity comprises the generation, transmission, distribution and supply of electricity, trade, market operation, the administration of the bilateral contracts platform and the operation of a closed distribution system. Natural gas activity comprises production, transmission, distribution, the operation of the storage system and of liquefied gas devices, supply, trade, market operation, platform administration and the operation of a closed distribution system. There is a material exception here as well: the generation of electricity that uses no transmission or distribution network and is intended in full for own consumption is not regulated by this law — unless the producer intends to sell the surplus electricity.
Mandatory Licensing
Licenses are issued by the Commission, in accordance with the Law on Licenses and Permits and the conditions provided by this law. In the electricity sector a license is required for the generation of electricity (with exceptions), its transmission, distribution and market operation. In the natural gas sector — for transmission, distribution, the operation of the storage system, the operation of liquefied gas devices and market operation. Water supply is likewise licensed. Carrying out these activities without a valid license is prohibited — the license is precisely the document that empowers an enterprise to conduct the relevant activity.
The exceptions are named precisely. Licensing is not required for: a person's generation of electricity solely for own consumption where neither the generation nor the consumption object is connected to a transmission or distribution network; the generation of electricity at the time an object is commissioned; generation by small and micro-capacity power plants; and a closed distribution system operator to whom the Commission has granted that status by decision. At the same time, a small-capacity power plant or energy enterprise that carries out, or intends to carry out, supply, trade or platform-administration activity without a license is obliged to declare this in the manner established by law. This means that "no license required" does not mean "nothing required" — a general rule still defines your obligations.
Frequently Asked Questions
These questions arise most frequently in connection with energy activity.
Which activities require a license?
In electricity — generation (with exceptions), transmission, distribution and market operation; in natural gas — transmission, distribution and the operation of the storage system, liquefied gas devices and the market; also water supply.
When does generation need no license?
Where the object is not connected to the network and the electricity is intended solely for own consumption; also for generation by small and micro-capacity plants and in other cases provided by law.
Does "no license" mean no obligations?
No — before starting supply, trade or platform administration a declaration must be made in the manner established by law.
Who issues the licenses?
The Commission, under the Law on Licenses and Permits and the conditions of the energy law.
How We Help on Legal.ge
On the Legal.ge platform you can obtain qualified legal assistance on any energy-sector question: obtaining licenses and authorization, access to the market, dealings with the Commission, structuring contracts and resolving disputes. A lawyer will assess your project and plan the legal route in line with the principles on which this entire regulation is built.