July 2017—Electricity supply: Few really think about it much until their lights (or their television) go dark. But having a choice in who supplies electricity has won fans in the private sector in Bosnia and Herzegovina (BiH) who are racking up cost savings that could turn into investment and much-needed jobs.
One example is ASA Prevent Group, the biggest private company in BiH. The company needs a lot of electricity to power its automotive, banking, leasing, insurance and transport businesses throughout the country. In 2016, ASA switched electricity suppliers—because it finally could after the electricity market opened up—and began buying its electricity at a much lower price.
Starting in January 2016, businesses connected to the distribution network in BiH have been able to switch to private suppliers and negotiate lower prices for electricity. Already some 60 business enterprises have switched to independent suppliers. And, under pressure from the new open market, state-owned utilities are now offering lower prices to thousands of other customers as an incentive to stay with them.
Although the specific cost savings for private companies is considered proprietary information, the total for BiH businesses so far is in the millions of Bosnian marks.
“ASA Prevent Group companies have saved significant amounts of money since May 2016, when the parent company switched [from a public utility that held a monopoly] to a commercial supplier,” said Mirsad Sabanovic, director of ASA Energija. “The savings achieved through lower electricity bills have enabled companies from the Group to be more competitive.”
The company also saw a good business opportunity in the electricity market opening, and has established a new branch to buy and sell electricity in BiH.
ASA Prevent Group and dozens of other BiH businesses are now reaping the benefits of the open electricity market. But just two years ago, a functioning open retail electricity market was considered impossible by the state-owned power utilities, the government and customers, too.
More companies are expected to arrange better electricity supply terms with their suppliers, meaning more investment potential in BiH will be unlocked through energy savings. And the increased competition will eventually lead to more options, even better rates, and new opportunities for consumers and innovative new companies alike.
The ability of customers to switch electricity suppliers—to have any choice in the matter—comes after years of USAID technical assistance to BiH in electricity sector reform. USAID’s Energy Investment Activity continues to build on these efforts by developing processes and procedures for small commercial customers and households to switch electricity suppliers.
With USAID funding support, the Energy Investment Activity and the National Association of Regulatory Utility Commissioners have jointly developed a one-of-a-kind price comparison platform to educate household consumers about how to shop for electricity and to foster the development of retail electric choice in BiH.
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, “The savings achieved through lower electricity bills have enabled companies from the Group to be more competitive.”
USAID Energy Investment Activity