VZCZCXRO2636
OO RUEHIK
DE RUEHPS #0471/01 3011632
ZNR UUUUU ZZH
O 281632Z OCT 09
FM AMEMBASSY PRISTINA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9376
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 1761
RHMFISS/CDR USEUCOM VAIHINGEN GE PRIORITY
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK PRIORITY
RHFMIUU/AFSOUTH NAPLES IT PRIORITY
RHMFISS/CDR TF FALCON PRIORITY
RHEFDIA/DIA WASHDC PRIORITY
RUEKJCS/SECDEF WASHINGTON DC PRIORITY
RUEPGEA/CDR650THMIGP SHAPE BE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHDC PRIORITY
RUZEJAA/USNIC PRISTINA SR PRIORITY

UNCLAS SECTION 01 OF 03 PRISTINA 000471 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR/SCE, EUR/PGI, INL, DRL, PRM, USAID 
 
E.O. 12958: N/A 
TAGS: ECON ENRG PGOV KV SR
SUBJECT:  KOSOVO: KEK READY TO SUPPLY POWER TO NORTH, WAITING FOR 
SERBIAN COOPERATION 
 
REF:  PRISTINA 465 
 
PRISTINA 00000471  001.2 OF 003 
 
 
SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY 
 
¶1. (SBU) SUMMARY: Following a nine-day outage due to weather and 
line maintenance (Reftel), the Kosovo Energy Corporation (KEK) is 
prepared to reestablish electrical power supply to northern Kosovo 
without insisting on collecting for energy use at this time.  In an 
attempt to meet the power needs of Kosovo north of the Ibar during 
the disruption, the Serbian electric utility EPS has provided power 
from Novi Pazar, Serbia.  However, the amount and quality of 
electricity transferred over the Novi Pazar line has fallen short of 
demand.  Though KEK has notified the Serbian transmission utility 
EMS that it is ready to resume supplying power to the north, EMS and 
EPS have refused to allow KEK to do so.  Since the outages began, 
Belgrade officials have publicly acknowledged that all customers 
receiving electricity must pay for the service, and have announced 
plans for EPS to register and meter customers in northern Kosovo by 
November 1.  Representatives from the Serbian Ministry for Kosovo 
have indicated to us that registering and metering are steps toward 
an Energy Service Company (ESCO) Memorandum of Understanding (MOU) 
with KEK to allow an EPS subsidiary to provide services as a KEK 
sub-contractor north of the Ibar.  That said, the slow pace of 
negotiations and lack of a positive response to KEK's request to 
reconnect could be an attempt to play for time, and a sign that 
hardliners who would like to use this episode to separate the 
northern part of Kosovo from the rest of Kosovo's energy network 
have the upper hand.  If Belgrade remains intransigent, KEK will 
need to consider options for securing control of the Valac 
sub-station.  END SUMMARY 
 
SERBIAN UTILITY SEEKS TO FILL POWER GAP IRRESPONSIBLY 
--------------------------------------------- -------- 
 
¶2. (SBU) Rolling blackouts continued in northern Kosovo over the 
last week, as KEK worked to complete maintenance on two of three 
110kV lines that normally carry power to the north.  KEK cut power 
to northern Kosovo on October 19 after unseasonably cold weather 
caused a dangerous spike in demand beyond the capacity of the single 
functioning line and after employees at the Valac sub-station, also 
in northern Kosovo, refused to implement necessary safety 
precautions.  Instead, Valac employees, who are also employed by the 
Serbian electric utility EPS, took unilateral steps to supply power 
to northern Kosovo through a 110kV line from Novi Pazar, Serbia.  In 
order to allow power to enter Kosovo on this line, EPS employees 
manipulated the sub-station at Valac without consulting KEK.  The 
line has supplied 25-30MW of power per day on average to the north, 
but it has not been enough to meet demand, and the quality has been 
poor (low voltage). 
 
KEK MAINTENANCE COMPLETE; READY TO RESTORE POWER 
--------------------------------------------- --- 
 
¶3. (SBU) As a goodwill gesture, KEK has supplied additional 30MW of 
power to the north during peak demand hours from the Ujmani 
hydropower station in the northern municipality of Zvecan.  In the 
meantime, the weather has warmed (in fact, it is now unseasonably 
warm), and KEK has completed maintenance on the two 110kV lines that 
were down on October 17-18 when the demand for power in the north 
spiked.  On the morning of October 26, two of the three 110kV lines 
running from the south to the Valac sub-station were available, but 
an unplanned outage due to a boiler leak in one of Kosovo A's 
generating units sidelined one of these lines.  KEK expects to 
complete repair of the generating unit by October 29.  However, 
actual restoration of power to the north will require active 
cooperation from EPS employees at the Valac sub-station, who must 
disconnect the Novi Pazar line, allowing electricity to flow from 
the south to Valac and the rest of northern Kosovo. 
 
VALAC'S SERBIAN EMPLOYEES REFUSE KEK'S OFFER 
-------------------------------------------- 
 
¶4. (SBU) On October 27, KEK notified EPS operators at Valac in 
writing that the company had completed maintenance and was ready to 
resume delivery of power north of the Ibar.  A written response was 
requested in order to coordinate disconnection of the Novi Pazar 
line and reconnection of power from the south.  EPS employees at 
 
PRISTINA 00000471  002.2 OF 003 
 
 
Valac have not provided an official response, but they told Kosovo's 
distribution utility, KOSTT, by phone on October 27 that they could 
not take any action until they received instructions from "their 
superiors."  The Managing Director of KOSTT told us on the same day 
that Serbia's transmission utility, EMS, informed him by phone that 
there was no objection to activating the available 110kV lines from 
the south, but that EMS did not intend to disconnect the Novi Pazar 
line.  KEK officials explained to us that it is technically 
impossible to reconnect their 110kV lines to Valac, if Valac 
continues to draw power from the Novi Pazar line because the power 
from the different lines is not in phase, something our KEK contacts 
believe EMS officials fully understand. 
 
COMMON GROUND UNCOVERED 
----------------------- 
 
¶5. (SBU) KEK's October 20 power outage was not related to its plans 
to regularize non-paying electricity customers in the north. 
Nonetheless, KEK has continued discussions -- begun in May -- with 
officials from EPS, the Serbian Ministry of Energy, and the Serbian 
Ministry for Kosovo about creating a Kosovo-registered, but 
Serbian-operated, energy services company (ESCO) to provide 
metering, billing, collections and operational services north of the 
Ibar.  Over the course of the last week, Serbian government 
officials have publicly announced that paying for electricity was 
not optional, and that steps would be taken to register and meter 
customers north of the Ibar who received power from the Novi Pazar 
line by November 1.  In other words, Serbian pronouncements about 
paying for power have implicitly endorsed KEK's position that bill 
payment in the north is a commercial, not a political, issue. 
 
SOME SERBS URGE CONTINUED POWER CUT-OFF 
--------------------------------------- 
 
¶6. (SBU) On October 25, KEK officials met with the Serbian Deputy 
Assistant Minister for Kosovo Dragan Petkovic to review its plans to 
reconnect power to the north.  Petkovic shared what he said was 
Minster Bogdanovic's view that power not/not be reconnected from the 
south, unless or until the weather turned cold.  According to 
Petkovic, any serious attempt at bill collection in the north could 
only be attempted after customers had seen that Serbia was unable to 
supply power north of the Ibar, as was demonstrated over the last 
week.  The request not to reconnect the north was reiterated by 
Petkovic to KEK on October 27, who pointed out that it would be 
"...very risky to put the power back without an (ESCO) agreement 
being finalized."  Petkovic claimed that he did not foresee any 
serious problem in Belgrade with moving forward with the ESCO 
agreement.  Petkovic told us separately on October 26 that he and 
Minister Bogdanovic viewed customer registration and bill collection 
in the north by November 1 as a step toward an ESCO agreement with 
KEK. 
 
HARDLINE VISIONS OF ELECTRICAL INDEPENDENCE 
------------------------------------------- 
 
¶7. (SBU) While Petkovic sees the unexpected KEK power cut-off as a 
serendipitous route to resolving the long-festering bill collection 
issue in the north, hardliners appear to have a different agenda. 
They have moved quickly to politicize the cut-off.  Though it is 
well-known that the power cuts were the result of weather and 
technical problems, Oliver Ivanovic, State Secretary of Serbia's 
Ministry of Kosovo claimed on October 26 that the blackouts were 
politically motivated and should not have happened.  Ivanovic also 
warned that conflict could erupt in northern Kosovo if the 
politicization of electricity continues.  This followed statements 
of Radenko Nedeljkovic, chief of Serbia's parallel administration 
for the North Kosovo district, who stated that the Serbs in northern 
Kosovo would use any means to prevent KEK from assuming control of 
the Valac sub-station and were considering countermeasures for what 
he considered a disconnection of power for political reasons.  These 
comments, and the refusal of EPS employees to allow KEK to reconnect 
power, have prompted speculation that hardliners see the power cuts 
as an opportunity to connect north solely to Serbia's electric grid, 
whatever its shortcomings. 
 
COMMENT 
-------- 
 
PRISTINA 00000471  003.2 OF 003 
 
 
 
¶8. (SBU) While conducting scheduled maintenance, KEK has made every 
effort to supply northern Kosovo with power while protecting the 
integrity of the overall system.  The confluence of unplanned events 
has allowed serious discussion with EPS and Serbian government 
officials about an ESCO MOU to resume, which is welcome.  However, 
events have also highlighted that not all elements of the Serbian 
government desire a practical solution with KEK, as evidenced by 
comments of Serbian hardliners encouraging direct connection of 
Kosovo's three northern municipalities with the Serbian electrical 
grid.  Now that the technical line faults have been repaired and 
official notification given to EPS and EMS that KEK is ready to 
provide power to northern Kosovo again, it is up to KEK's Serbian 
counterparts and Belgrade officials to reciprocate KEK's good faith 
efforts to restore the status quo.  In the event that EMS and EPS 
refuse KEK's requests, KEK will have to consider appropriate action 
to secure control of the Valac sub-station, the common entry point 
to the north for both the Novi Pazar and the KEK lines, in order to 
restore and regularize service to customers in the north. 
 
DELL