The Kosovo Electricity Distribution Company (KEDS) began cutting off electricity to around 450 businesses on August 16, enforcing a regulatory decision that requires all consumers to secure contracts with licensed electricity suppliers.

The decision was announced by KEDS on August 14. The move, mandated by the Energy Regulatory Office (ERO), is another escalation in the country’s fraught attempt to liberalise its power market.

In a public notice, KEDS said it is legally barred from providing electricity to customers without valid contracts. The company clarified that it does not supply power itself but merely manages distribution and is obliged to implement ERO decisions.

More than 1,400 meters were identified at the affected companies, with around 600 cut remotely and the rest disconnected on site. KEDS urged firms to urgently sign contracts to restore supply, stressing that the measure is a legal obligation under Kosovo’s electricity law and the rule on switching suppliers.

The disconnections sparked concern among business associations, which warned of severe economic consequences. In a joint statement, the main chambers of commerce in Kosovo — including the American, German-Kosovar and British chambers — cautioned that halting electricity to producers would trigger job losses, higher prices, reduced competitiveness and even plant closures.

The chambers appealed to ERO to suspend the measures and allow a more gradual transition, arguing that the speed of implementation is destabilising the economy.

Their warnings echo earlier concerns raised before the August deadline, when business groups predicted rising imports, reduced exports and increased production costs if companies were forced abruptly onto the free market.

The controversy is complicated by conflicting court rulings. In late July, the First Instance of the Commercial Court suspended ERO’s liberalisation calendar, ruling that the measures were illegal and ordering a return to the universal market with regulated tariffs.

The court held that until a final decision is reached, businesses cannot be compelled to enter the free market. Lawyers argued that the decision was immediately enforceable, producing direct legal effect.

Later, ERO stated that a separate second-instance court decision confirmed the legality of its actions, providing the regulatory basis for the August 16 disconnections.

This clash of interpretations has left companies caught in legal limbo, unsure whether the regulator’s or the court’s position takes precedence. Some businesses are preparing lawsuits seeking compensation for what they describe as inflated bills and irregular invoicing practices during the transition.

Billing has been another flashpoint. Large consumers who were moved onto the open market without formal contracts reported receiving June invoices weeks late under the Supplier of Last Resort (SoLR) programme.

Others claimed bills were issued in the name of the state-owned Kosovo Energy Corporation (KEK) rather than their previous supplier KESCO, raising questions about the legality of the charges. The Kosovo Chamber of Commerce and Industry argued that such irregularities give companies grounds to challenge the bills in court.

Lawyers have noted that if the annulment of ERO’s decision is upheld, retroactive claims for compensation could follow, though this depends on the outcome of the ongoing judicial process. For now, the situation has created extraordinary confusion, with businesses facing both disconnections and disputed liabilities.

The dispute exposes the deep tensions surrounding Kosovo’s stalled energy reforms. The country adopted a legal framework for market liberalisation in 2016, in line with European commitments, but has repeatedly postponed full implementation. Kosovo remains the only country in the region yet to open its electricity market to free competition.

For policymakers, liberalisation is intended to encourage efficiency, attract investment and align Kosovo’s energy sector with EU standards.

For businesses, however, the abrupt transition risks undermining stability, especially given the country’s heavy reliance on electricity-intensive industries. The recent disconnections, coming at a time of broader economic challenges, have fuelled concerns about lost competitiveness and declining investor confidence.

Amid the standoff, the American Chamber of Commerce in Kosovo renewed its call for an inclusive dialogue between the government, regulators and the business community. It argued that reforms in strategic sectors like energy must rest on transparency, legal certainty and fair treatment of all market participants.