Georgian National Energy and Water Supply Regulatory Commission (GNERC) has approved the Unbundling Rules for the Distribution System Operator that apply to the operators acting in the electricity and natural gas sectors. GNERC will control compliance of the Distribution System Operators with the unbundling requirements. 

Vertically integrated undertakings carrying out solely energy activities are subject to the unbundling obligation. According to the rules the Distribution System Operator that is a part of the vertically integrated undertaking shall be independent in terms of the legal form, organizational structure and decision-making that is not related to the distribution activities. The vertically integrated undertakings shall ensure unbundling until the end of the current year. 

The rules do not apply to the horizontally integrated undertakings (undertaking that carries out other non-energy activities together with the energy activities). Hereby, energy undertaking that provides services to less than 100 000 customers might be exempt from the unbundling obligation on the basis of the Law of Georgia on Energy and Water Supply. 

On the basis of these rules mandatory criteria for the unbundling of electricity and natural gas distribution system operator will be defined and compliance of the distribution system operator with those requirements will be evaluated. The rules establish requirements related to developing, implementing, submitting, approving and publishing compliance program, as well as, to the activities of compliance officer. 

Distribution System Operator Unbundling Rules are approved on the basis of the Law of Georgia on Energy and Water Supply, the Rules are in compliance with the EU third energy package.