HERA Changes the Gas Market: Suppliers Will Compete for Every Customer

written by: Dražen Katalinić

The Croatian Energy Regulatory Agency (HERA) has opened a consultation on a new model of public gas supply service that would be implemented from October 1, 2027. The consultation is open until September 28, and HERA is collecting opinions from stakeholders before drafting the final model.

According to the proposed model, every supplier wishing to sell gas to households in a specific distribution area must also offer a public service under regulated conditions in the same area. This would abandon the previous model where HERA selects one supplier for the public service in each distribution area through a public tender.

– In the transitional model of public service from October 1, 2027, it is proposed to abandon the model of determining the supplier of the public service based on a public tender. It is proposed that every gas supplier offering or performing market gas supply to end customers in the household category in a specific distribution area must also have the option of public gas supply service, the price of which HERA prescribes based on methodology – HERA responded to Lider’s inquiry.

In this way, customers in a specific distribution area would be allowed to choose the public gas supply service from any supplier operating in that area, in addition to the market offers. The conditions of the public service would be regulated and equal for all suppliers in the same distribution area.

There would no longer be just one public supplier

In the public service segment, suppliers currently compete for the entire distribution area. From October 2027, they will have to compete for each individual customer, so there would no longer be just one public service supplier selected through a public tender.

If, for example, the City Gas Company Zagreb – Supply, Međimurje-plin, E.ON, Petrol, or another supplier were to offer market supply to Zagreb households, according to the proposed model, they would also have to offer a public service under regulated conditions.

HERA states that the goal of the proposed model is to increase market competition among suppliers to gradually prepare the market for complete deregulation.

The existing system, where one supplier provides the public service in a specific distribution area, would be replaced by a model where the customer chooses the supplier. Households would simultaneously retain the option of using the public service with a regulated price as a protective mechanism.

The consultation also considers ways to ensure continuity of gas supply if there is no supplier offering or performing supply in a specific distribution area. Among the proposed options are temporarily retaining the existing supplier in the public service obligation or transferring customers to a guaranteed supplier at the public service price.

Regulated prices remain for now

The transition to the new model would not mean complete deregulation of the market or fully market-driven gas pricing. The price of the public service would still be regulated, and its structure and calculation method would be prescribed by HERA.

The agency is currently conducting a new analysis of the gas market, which it is required to perform at least every three years. This analysis plays a key role in the deregulation process as it should show how developed the market is, whether there is sufficient competition and security of supply, and what other obstacles stand in the way of free price formation.

– A well-founded assessment of market readiness is crucial for implementing complete deregulation of gas prices, which implies fully market-driven pricing without the option of public service with a regulated price for all customers in the household category. All of this requires a high level of awareness and information among end customers about market conditions so that they can actively participate in it and encourage competition among gas suppliers with their decisions – HERA states.

Based on the new market analysis, criteria for assessing the functioning of the wholesale and retail market, and the effects of measures introduced so far, HERA will assess what else needs to be done to prepare the market for complete deregulation.

Only 2.7 percent of customers changed suppliers

One of the reasons why there is still no move towards fully market-driven gas pricing without a public service with a regulated price is the low activity of customers.

In 2025, there were 19,505 supplier changes, representing 2.7 percent of the total 713,675 billing measurement points connected to the distribution system. These data include households and businesses, not just customers from the household category.

A large number of supplier changes recorded in 2024 also cannot be considered evidence of a developed and active market. That year, there were 208,682 changes, meaning the supplier was changed at 29.2 percent of billing measurement points.

Such a jump was primarily due to the change of the public service supplier in the distribution area of the City Gas Company Zagreb. Međimurje-plin took over the public service on October 1, 2024, while a large number of customers decided to switch to the market offer of the previous supplier, the City Gas Company Zagreb – Supply.

Complete deregulation is only planned for a later phase, after HERA assesses that the market is sufficiently developed, that there is real competition among suppliers, and that customers are sufficiently informed and active to choose independently among market offers.