The Georgian National Energy and Water Supply Regulatory Commission (GNERC) is a legal entity of public law that operates independently within the scope of its authority defined by law and is not subordinate to any state authority. It is a collegial body and decisions are made by a majority vote. The Commission's sessions are open to the public, and any interested person may attend.

The establishment of the Georgian National Energy and Water Supply Regulatory Commission was a crucial component of the complex and extensive economic transformations initiated in Georgia's energy sector.

In August 1996, by Presidential Decree, the Commission was formed under the Ministry of Economy and was tasked with calculating both wholesale and retail electricity tariffs.

On June 27, 1997, the Parliament of Georgia adopted the Law on Electricity, based on which the Commission was established as an independent body. On August 8, 1997, by a Presidential decree, the first members of the Commission were appointed.

The first composition of the Commission consisted of three members – a Chairperson and two Commissioners. On October 2, 2008, an amendment was made to the law, increasing the number of Commissioners to five – a Chairperson and four members. The amendments also affected the rules for the appointment of the Chairperson and Commissioners. According to the Law of Georgia on Energy and Water Supply adopted in 2019, a candidate for Commission membership is nominated by the Government of Georgia through an open, transparent, and non-discriminatory competition. Based on the Government’s nomination, the President of Georgia, with the cosignature of the Prime Minister, submits the candidate to the Parliament of Georgia. The Parliament elects the Commission member for a term of six years in accordance with its Rules of Procedure. The Chairperson is elected from among the Commission members by secret ballot and majority vote for a term of three years.

From the outset, the law granted the Commission a high degree of independence. Within its competence, the Commission issues resolutions and decisions, which constitute normative acts in the field of energy. The law also defined the relationships between structural units of the electricity sector, created the legal basis for introducing market relations in the sector, attracting investments, establishing a competitive electricity market, and more.

This law laid the foundation for regulating the activities of natural and legal persons in the areas of electricity generation, transmission, dispatching, distribution, and consumption, as well as for ensuring the development of Georgia’s electricity sector in accordance with the principles of a market economy.

On April 30, 1999, amendments were made to the Law of Georgia on Electricity, and it was renamed the Law of Georgia on Electricity and Natural Gas. These amendments significantly changed and expanded the functions of the Commission. The Commission was granted the authority to issue licenses and regulate tariffs in the electricity and natural gas sectors of Georgia, thereby extending its powers and responsibilities to include the natural gas sector as well.

On November 20, 2007, another important amendment was made to the law, assigning the Commission regulatory authority over the water supply sector. Consequently, the name of the Commission was changed to the Georgian National Energy and Water Supply Regulatory Commission.

The Commission has carried out significant work in creating an entirely new normative framework for Georgia’s energy and water supply sectors. These efforts have aimed to enhance the implementation of license conditions by sector licensees, improve tariff-setting methodologies, operationalize market rules, develop and enforce normative documents, and, most importantly, regulate relations between sector licensees and consumers.

On December 28, 1998, the Commission issued the first licenses for electricity generation and distribution activities to Telasi JSC. As of today, there are 29 licensees operating in the electricity sector, 16 in the natural gas sector, and 8 in the water supply sector.

For the first time in its history, the Commission set electricity tariffs while still operating under the Ministry of Economy (in February 1997).

The electricity tariff calculation methodology was first approved on July 1, 1998; for the natural gas sector – on September 8, 1999; and for the water supply sector – on August 29, 2008. Each of these marked a first in the history of the respective sector’s development.

Between 2014 and 2019, in line with international practice, the Commission developed and approved new tariff methodologies for the electricity, natural gas, and water supply sectors. These methodologies ensure the setting of cost-reflective tariffs based on open and transparent tariff regulation principles. The new tariff methodologies made it possible to establish tariffs for long-term regulatory periods, which in turn incentivize operational efficiency and contribute to price stability. Based on these methodologies, the Commission established long-term tariffs for the first time in 2014 for the electricity sector, in 2017 for the water supply sector, and in 2020 for the natural gas sector.

The protection of consumer rights is a constant priority for the Commission. On June 1, 2001, the Civil Rights Protection Unit began operating within the Commission. Following the amendments to the Law of Georgia on Independent National Regulatory Authorities on July 22, 2003, and with the aim of enhancing consumer protection, the Service of the Public Defender of Consumer Interests was established under the Commission, functioning independently from its administrative structure. The primary role of this service is to protect the interests of electricity, natural gas, and drinking water consumers. Subsequently, regional offices of the Public Defender were opened in Batumi, Kutaisi, and Telavi.

In 2014, to systematize the review of complaints submitted to the Commission, the Consumer’s Complaints Department was established.

In 2012, the Commission approved the Service Quality Rules for the electricity, natural gas, and water supply sectors. These rules define general and guaranteed service standards, as well as the amounts of compensation payable to consumers in cases of violations. At the end of 2016, the Commission developed and launched an electronic monitoring system – the Electronic Journal, which allows the Commission to monitor, in real time, how distribution and water supply licensees comply with commercial service quality standards in the energy and water supply sectors.

To promote and support the use of green energy, in 2016 the Commission introduced a settlement and metering rule for consumers who own micro-capacity power plants – the so-called “net metering” program. Net metering is a process of bidirectional accounting of electricity sent to and received from the network by micro power plants, offsetting the generated and consumed electricity. Net metering has enabled consumers to meet their own energy needs, reduce utility expenses, and receive benefits from distribution companies. The first participant in net metering was Instam LLC, and currently, 1,700 consumers are enrolled in the program.

Since 2017, Georgia has been a member to the Energy Community. Pursuant to the Protocol of Accession to the Treaty Establishing the Energy Community, Georgia is obliged to implement EU legislation and approximate its national legislation with that of the European Union. To fulfill this obligation, the Parliament of Georgia adopted the Law of Georgia on Energy and Water Supply in December 2019. This law complies with the EU’s Third Energy Package and aims to establish the appropriate legal environment for the liberalization of energy markets. The new law strengthened the functions of the Commission as an independent regulatory authority and equipped it with all the powers required under EU legislative standards for an independent energy sector regulator.

The Commission actively cooperates with various international organizations, including NARUC (National Association of Regulatory Utility Commissioners), USAID (United States Agency for International Development), the Energy Community, IWA (International Water Association), and others. Notably, the Commission is one of the founding members of the Energy Regulators Regional Association (ERRA), established in Budapest in December 2000 through the initiative of 15 European and Asian countries. The Commission’s first Chairperson, Elizbar Eristavi, was granted honorary membership of ERRA. At different times, Commissioners Gocha Shonia and Maia Melikidze served as members of ERRA’s Presidium, and in 2020, Commissioner Maia Melikidze was elected as Chair of ERRA.

The Commission is also a founding member of the Association of European Water Regulators (WAREG), which was established in April 2014 on the initiative of regulators in the water and wastewater sectors. WAREG currently comprises 25 regulatory authorities with member status and 4 with observer status. Experts from the Commission actively participate in WAREG’s General Assembly and working group meetings.

From 2017 to 2019, Commissioner Giorgi Pangani served as the President of the Energy Community Regulatory Board (ECRB). This partnership, along with cooperation with foreign regulatory authorities, international organizations, and various projects, facilitates the Commission's awareness of ongoing developments and challenges in the energy and water supply sectors. Furthermore, within the framework of international cooperation, Commission staff participate in various partnership programs to share Georgia’s regulatory experience in the energy sector.

To support education and raise awareness in the energy and water supply sectors, the Commission collaborates with several higher education institutions, including the Georgian Technical University, Akaki Tsereteli State University in Kutaisi, and Grigol Robakidze University. These memoranda of cooperation include provisions for student internships and academic training at the Commission. The Commission also assists students in accessing information and literature for conducting research in the energy sector.

The Commission is continuously working to create new opportunities for consumers and to establish a unified regulatory approach across all three sectors in terms of service conditions and procedures. Ongoing projects include: enabling consumer registration changes at Public Service Halls (e.g., in cases of real estate purchase or rental); the development of a unified electronic permitting platform; the implementation of the USSD code *303# interactive service, which allows consumers to retrieve bills, check balances, report service interruptions (for prompt response), add or remove subscriber numbers, and access other relevant information; and the completion of a “mystery shopper” research project, aimed at assessing service delivery and compliance from the consumer’s perspective.

The Law of Georgia on Energy and Water Supply, adopted in 2019, fundamentally changed the energy market model by prioritizing market liberalization. The new market model envisages the creation of a competitive and liquid electricity market, where suppliers trade electricity at competitive prices. Consumers, in turn, gain the ability to choose their suppliers based on pricing, thereby ensuring freedom of supplier choice and affordability of consumer prices. In support of market reform, the Commission has developed and approved several by-laws, including the Retail Market Rules and the Electricity Market Rules (covering the Day-Ahead Market, Intraday Market, Balancing Market, and Ancillary Services Market). The new market was partially launched in the summer of 2024.

Under the Law of Georgia on Water User Organizations, adopted on December 26, 2019, the Commission was assigned regulatory authority over the amelioration sector. With the amendments made to this law on May 3, 2023, the Commission's functions and powers in the field of amelioration regulation were significantly expanded. On August 30, 2023, by Resolution No. 39, the Commission approved, for the first time, the Irrigation Water Supply Rules.

The Commission is focused on innovation and development. To better fulfill its mission and strategic objectives, the Commission obtained ISO 9001:2015 international standard certification in 2020 and implemented a modern quality management system. In 2023, the Commission received a positive evaluation from an external international audit and was issued a renewed certificate.

Building on the success of the Media Club project, the Commission established the Elizbar Eristavi Energy Training Center (a Non-Entrepreneurial Non-Commercial Legal Entity) on February 4, 2022. The Center aims to enhance the qualifications of professionals employed in the energy sectors, increase women’s participation, inform target groups, raise public awareness, conduct research and develop recommendations in cooperation with local and international organizations, and ensure comprehensive information for potential investors.