The Commission's Status and Legal Acts
The legal basis of the activity of the Georgian National Energy and Water Supply Regulatory Commission is the Constitution of Georgia, international treaties, the Law on National Regulatory Bodies, the law on energy and water supply, the commission's statute and other subordinate normative acts approved by the commission. The commission regulates and supervises the activities of the electricity, natural gas and water supply sectors as the single regulatory body of these sectors.
The commission is responsible for the legality of the administrative-legal acts it adopts — regulations and decisions. Its legal acts must be in written form, substantiated and, where necessary, contain clarifications regarding their implementation. On individual, specific issues, including those arising from regulations, the commission adopts decisions within its competence. The rules, conditions, criteria, standards, mechanisms and methods provided for by the law are approved by normative administrative-legal acts — regulations.
The Commission's Tasks
In performing its duties, the commission must take all reasonable measures to accomplish several tasks. In close cooperation with the Energy Community Regulatory Council, the parties' regulators and the Secretariat, it promotes competitive, safe and ecologically sustainable internal energy markets, effective market opening for all consumers and suppliers, and appropriate conditions for the effective and reliable operation of energy networks. It promotes the removal of restrictions related to energy trading, the development of safe, reliable, non-discriminatory and consumer-oriented systems, energy efficiency and the integration of renewable energy production into the networks.
Particularly important for the consumer is the task of ensuring that consumers can benefit from the effective functioning of energy markets, that effective competition is encouraged and consumers protected. Among the commission's tasks are also ensuring a high standard of public service in the electricity and natural gas sectors, protecting vulnerable customers and promoting the compatibility of data exchange processes needed for switching suppliers.
Authorization and Supervision Functions
For the purposes of authorization and the establishment of activity conditions, the commission issues licenses, amends, suspends and revokes them; certifies transmission system operators and permanently supervises their compliance with the independence and unbundling requirements; establishes the rules and conditions for the provision of services by regulated enterprises; determines the drinking water consumption norm; establishes the drinking water supply and consumption rules governing relations between the water supply licensee and the customer; approves standard contract terms and a unified accounting system.
Among its supervisory functions are: supervising the activity of regulated enterprises and ensuring their compliance with statutory obligations; supervising the provision of public services; keeping the registry of energy enterprises; conducting on-site inspections of regulated enterprises, including without prior notice; and determining reporting rules. The commission also sets quality standards for the operation of systems and the provision of services, and compensation mechanisms for non-compliance with those quality standards.
Tariffs and Tariff-Setting Deadlines
For the purpose of setting tariffs and fees, the commission approves electricity and natural gas transmission and distribution tariffs and calculation methodologies, connection fees, drinking water tariff calculation methodologies, the amount of normative losses, and the amount and calculation rules of the regulation fee. Tariffs and fees must be substantiated, reasonable, verifiable, non-discriminatory and transparent, protect the consumer from monopolistic prices and reflect the justified costs of operating, maintaining and developing the networks.
When considering tariff matters, the commission holds open sessions, relies on a substantiated tariff application accompanied by audit and financial information, and reviews comments from consumers and other interested parties. The commission approves a tariff within 180 days from the submission of the tariff application, provided the application satisfies the commission's requirements. The commission's legal act on setting tariffs, fees or price caps is published a reasonable time before entering into force.
Consumer Protection and Dispute Consideration
For the protection of consumer rights and the resolution of disputes, the commission, together with other competent state bodies, ensures the effectiveness of consumer protection measures, so as to guarantee fair and non-discriminatory treatment, high-quality service and competition. The commission ensures the accessibility of consumer consumption data in an easily understandable, harmonized format nationwide and unimpeded access to these data for every consumer.
The commission considers disputes in accordance with the law and the dispute consideration rules it has approved; within the framework of promoting transparency on the energy market, it publishes recommendations at least once a year on the compliance of supply prices with the law. It protects contractual freedom with respect to interruptible supply contracts and long-term contracts exceeding 10 years, where they comply with the requirements of Georgian and Energy Community legislation. The commission supervises restrictive contractual practices that prevent large customers from concluding contracts simultaneously with more than one supplier or limit their choice.
Liability of Regulated Enterprises and Penalty Sanctions
A regulated enterprise is responsible, in each of its activities, for the due performance of its own functions and tasks, in accordance with the requirements and obligations established by the law and other legal acts. For violating its obligations or performing them improperly, it may be held liable in the manner established by this or another law.
The commission is entitled to impose liability on a physical or legal person, in the manner established by legislation, for violating the requirements of the law or of a commission legal act. The penalty sanctions are varied, and each is applied separately:
- for non-fulfillment of obligations related to the unbundling of activities or the independence of the transmission system operator, the commission may issue a written warning to the transmission system operator or a vertically integrated enterprise, or impose a fine not exceeding 10 percent of its previous year's annual turnover;
- in case of market manipulation, attempted manipulation or trading using inside information, the commission imposes on the regulated enterprise a fine not exceeding 6 percent of the enterprise's previous year's annual turnover;
- for each violation of the law's requirements, the commission may issue a written warning to the regulated enterprise or impose a fine from 5,000 to 75,000 GEL;
- for repeated commission of these violations, a ban on carrying out energy and professional activity for up to 1 year may be applied together with the fine;
- where the violation is not eliminated or is repeated within 1 year, the commission is entitled to impose a doubled fine.
The grounds for the fine from 5,000 to 75,000 GEL include, among others: conducting several economic activities without separation and accessibility of accounts; failure to submit the activity report; failure to provide the data and information requested by the commission, the system or market operator; refusal of access to the system in violation of legislation; violation of licensing conditions; non-fulfillment of the commission's lawful demands; and violation of other requirements defined by the law and the commission's normative acts. A fine may also be imposed on a person carrying out activity without a license or without a final positive decision on certification, or who fails to notify the commission of the start of activity. An imposed fine, together with its substantiation, is reflected in the commission's decision.
Imposition of Sanctions, Disputes and Appeal
The procedure for imposing sanctions is determined under the conditions established by the law, and disputes are considered in accordance with the law and the dispute consideration rules approved by the commission — meaning that the specific procedural deadlines and stages are defined by the commission's respective acts, and a party to a dispute may demand exactly their observance. A decision of the commission may be appealed in court under the procedure established by Georgian legislation. Thus, any decision of the regulatory body, including a decision on imposing a sanction, is subject to judicial control, which constitutes an important guarantee for regulated enterprises and consumers alike.