Georgian National Energy and Water Supply Regulatory Commission (GNERC) celebrated its 16-year anniversary in 2013. The Commission has been regulating the electricity sphere since 1997, taking over the natural gas sector regulation in 1999 and water supply sector regulation in 2007 (as a result of legal changes).
Initially, the Commission was established under the Ministry of Economy in August,1996 and its main function was to calculate wholesale and retail electricity tariffs.
On June 27, 1997, Parliament of Georgia adopted a Law on Electricity, which was published on August 1 of the same year and became effective immediately. From that day onwards, the Commission became an independent authority. Under the President’s Order on August 8, 1997, the first commissioners were appointed.
The Regulatory Commission has been granted a high level of independency by the law from the very beginning. It became a standing legal entity of public law, which is not subordinated to any state authority and organization. Within its competence, the Commission issues Resolutions and Ordinances which are normative acts in the energy sphere. By establishing the Regulatory Commission, Georgia laid foundation to an enormous and a very complicated process of economic transformation in the Georgian energy sector.
The Georgian Law on Electricity defined the relationships between the structural units of the energy system and created legal grounds for coordinating the market relations, attracting investments and developing the competitive energy market, etc.
This law gave basis to starting the regulation of the activities of natural persons and legal entities in the areas of energy generation, production, dispatch, distribution and consumption. The Law also provided for the development of the energy system in accordance with market economy principles.
During the first two years (1997-1998), various international organizations supported intensive structural transformations and economic reforms. The main goal was to improve the sector management, create favorable environment for investments and facilitate the sector development.
In 1999, the changes and amendments were made to the Georgian Law on Electricity. The law was renamed to the Georgian Law on Electricity and Natural Gas and the title of the Commission was changed to Georgian National Energy and Water Supply Regulatory Commission (GNERC). Under the new Law, GNERC received the authority to issue licenses and to regulate tariffs. Moreover, the Commission functions were significantly changed and expanded to cover the regulation of the natural gas sector.
The second wave of changes and amendments to the law took place in 2007 by which the Commission acquired a regulatory function for the water supply sector.
Over the last 16 years, the Commission has carried out a tremendous work to develop a totally new normative base in the areas of energy and water supply. For the license holders to fulfill the license conditions thoroughly, the Commission constantly refined the tariff methodologies, enforced the market rules, reviewed and issued the normative documents and what’s more, contributed to establishing the relations between the producers and consumers.
Between July, 2008 and January 31, 2014, GNERC was based in Kutaisi.
Among others functions, the main and the most important function of the Commission is to set and regulate tariffs. The tariff setting methodology for the electricity sector was first adopted on July 1, 1998, for the natural gas sector – on September 8, 1999 and for the water supply sector – on August 29, 2008. These were the first methodologies in the development history of each sector. From June 8, 2011, the upgraded tariff methodology entered into force.
The first electricity tariffs in the history of the Commission were set in February, 1997 while functioning under the Ministry of Economy.
The Commission is committed to protection of customers’ rights, as they are the most important values for the stable, independent and organized public care. For this reason, on June 1, 2001, sub-unit on Public Rights was established in the Commission and on July 22, 2003, a separate division – Office of Public Defender of Consumers’ Interests was created on the basis of the amendments made to the Georgian Law on Independent National Regulatory Authorities. The main function of the Defender’s Office is to protect the interests of electricity, natural gas and water supply consumers. The Commission also carries out an important work for improvement of the service quality. In this respect, the uninterrupted electricity supply and management of commercial service quality shall be specially mentioned.
The Commission enjoys a very good and well-deserved reputation at the international level. It is a co-founder of Energy Regulators Regional Association (ERRA), which was established in Budapest under the initiative of 15 European and Asian states. The Commission actively cooperates with many different international organizations: National Association of Regulatory Utility Commissioners (NARUC), US Agency of International Development (USAID), Energy Community, European Union, International Water Association, etc.
From February 1, 2014, the Commission moved to Tbilisi at Adam Mitskevichi str. 19.