| Country Information Moldova - News
Summer 2004:
In 2004, the main task of the National Energy Regulatory Agency was improvement of the legal regulatory framework. Thus, on March 26, the Administrative Council of the National Energy Regulatory Agency has approved the new methodology for calculation, approval and application of tariffs for natural gas, which should promote investments of gas suppliers in gas networks of the republic.
This by-law sets a new method for calculation of profitability of companies based on the volumes of investments made by gas companies in reconstruction, upgrading and development of their production facilities. This tariff component was earlier calculated based on total costs of such companies.
Thus, for investments made during the first year profitability of gas companies will be 23 % of the amount of new investments. For investments made in subsequent years from company’s own funds is determined on the level of an average interest rate applied in the corresponding year for treasury bonds of the Republic of Moldova with the period of circulation 364 days. For investments made from bank credits and borrowed funds profitability is determined on the basis of average interest rates for long-term bank credits (five and more years) set by the National Bank of the Republic of Moldova for a corresponding year adding maximum 5 points.
The new methodology states that in order to make investments gas companies should first of all use their own funds (depreciation amounts) and only if they are insufficient they can turn to credits and loans.
Also, in accordance with the new methodology gas suppliers are entitled to request for tariff revision during a year provided there are objective uncontrollable factors justifying such a step, able to cause deviation in the amount of 3 per cent from the initially set tariff value.
In order to motivate companies to acquire natural gas at lower prices, the Methodology stipulates incentives for companies for efficient purchases of natural gas in the amount of 0.5 % from the price difference resulting from reduction of actual average purchase prices in U.S. dollars versus those approved at the time the tariff was set.
Some other by-laws that are absolutely new for our energy sector are at the final stage of preparation, they became necessary due to liberalization of the electricity market of the country and progressive processes that take place in energy sectors of neighboring countries. One of such documents is Electricity Metering Code defining enterprises that should measure electricity, as well as principles of measurement for commercial purposes of generated, imported, exported, transit, transmitted, distributed, supplied and consumed volumes of electricity in the Republic of Moldova. The Electricity Metering Code will be mandatory for generating companies, distribution companies, electricity suppliers and consumers.
In addition, the Agency is working on improvement of a number of regulations that were tested in practice in the course of last two years, among which are Regulations on electricity supply and utilization, Regulation on natural gas supply and utilization.
A significant event occurred in the energy sector of the republic at the beginning of the year: on January 21, 2004 the National Energy Regulatory Agency (ANRE) accredited the first eligible consumer in the Republic of Moldova —„Ciment” SA company, which thus obtained the right to sing direct contracts with any suppliers of electricity in the country and abroad.
It became possible due to the electricity market opening in the spring of 2003 for consumers connected to networks with voltage 110 and 35 kV. In order to get the right to choose an electricity supplier consumers should meet a whole set of requirements, such as lack of debts on electricity bills, financial solvency, etc.
Liberalization of the electricity market is carried out in order to decrease prices for electricity and to attract investors to the sector. According to amendments adopted by the Parliament of the Republic of Moldova to the Law on Electricity, the electricity market has to be liberalized by March 2005. ANRE sets stages of liberalization.
To ensure efficient energy regulation the Agency actively studies experience of other countries in this area. Thus, from March 13 to March 22, 2004, specialists from the Agency visited the state of Iowa (USA), where they exchanged experience with their colleagues from the Iowa Utilities Board (IUB) on such issues as safety measures, tariff design and public participation in the energy regulation processes. This meeting of regulators from the Republic of Moldova and the state of Iowa is the sixth one. These meetings are organized in the framework of the partnership program aimed at improvement of regulatory activities in the Republic of Moldova and at creating cooperation between regulators from two countries. The program is carried out under the auspices of the NARUC (U.S. National Association of Regulatory Utility Commissioners), and is funded by the U.S. Agency for international development (USAID).
Spring 2004: Dispute related to consumer’s metering equipment
On 17 September 1998 by Gas Act # 136-XIV and Electricity Act # 137-XIV, the Parliament of the Republic of Moldova established that the consumer shall incur all the costs related to connection, and shall cover all costs related to purchase, testing and installation of energy metering equipment, installations and pipes necessary for connection to transmission or distribution networks.
Earlier, on 19 February 1998 the Parliament approved the Energy Act # 1525-XIII according to which the metering equipment is in the ownership of supplier that shall maintain it in appropriate manner in accordance with norms in force. Also, it was established that the periodical testing, repair and replacement of metering equipment is carried out by the supplier on its own account. Nevertheless, the Parliament has not taken into consideration the fact that pursuant to Art. 9 of Ownership Law the ownership right is acquired on the basis of production or acquisition of property as a result of transaction, hereditary succession, establishment of ownership right in the ways non-conflicting with legislation of the Republic of Moldova. In this connection, the Constitutional Court of the Republic of Moldova mentioned that the lawmaker granted the consumer with the right of ownership of metering equipment and the consumer becomes the owner of metering equipment from the moment he/she purchased it. Based on the components comprised in definition of right of ownership, the consumer acquires the right of ownership, usage and disposal of the property on exclusive and permanent basis, at his own will and his own interests, under conditions provided by the law, the Constitutional Court counseled that the syntagma “the energy metering equipment is in the ownership of suppler”, provided by the Law of February 19, 1998, infringes the right of private property and the application of the provisions of the contested norm is considered as expropriation and constraint of right of property of consumer. In view of mentioned circumstances, the Constitutional Court decided to consider the Art. 14 of Energy Act # 1525-XIII of February 19, 1998 as unconstitutional provision.
Subsequently, the Lawmaker set this norm forth in a new version, providing that the owners of energy metering equipment (suppliers or consumers) shall maintain it in compliance with established norms of maintenance and operation, in addition the lawmaker amended the p. 3 of Art. 14 according to which the supplier shall provide services related to periodical testing, repair and replacement of metering equipment to population on his account. I believe that this norm contravenes the acts previously approved. The consumer is the owner of metering equipment and shall shoulder the costs of installation, maintenance and repair of mentioned equipment. On November 5, 2001 the Supreme Court of Justice of the Republic of Moldova provided its comments on this issue. Notwithstanding the fact that the decisions were approved, the new version of p. 3 of Art. 14 of Law # 1525-XIII of February 19, 1998 has not been changed so far. In the nearest future this controversy will be reviewed again by the court. It is hard to say what decision will be taken.
By Evlampie Donos , Head of Legal and Consumer Protection Department of ANRE/Moldova Spring 2004: ANRE Has Approved Four New Normative Acts Aiming at Stimulating Investments In The Power Sector of The Country
The Administration Council of National Agency for Energy Regulation (ANRE) finished the year 2003 approving four new methodologies providing for investment stimulation mechanism in the power sector.
These are: Methodology for calculation, approval and application of tariffs for electricity, heat and make-up water generation, Methodology for calculation, approval and application of tariffs for electricity transmission and dispatch services, Methodology for calculation, approval and application of electricity supply tariffs for state-owned distribution companies and Methodology for calculation, approval and application of tariffs for heat supply to final consumers.
The new methodologies provide for utility’s profit margin depending on the investments made in development of sector. The previous normative act was providing for the profit margin depending on the costs incurred by the utility the fact that did not stimulate its interest in investments.
At the basis of mechanism applied for calculation and regulation of tariffs are the principles of reliable supply of energy resources to consumers at minimal costs, coverage of costs related to efficient operation of utilities and environment protection, as well as principle of voltage-based differentiation of electricity tariffs.
The mentioned normative acts were developed in compliance with legislation related to the sector and international practice. Spring 2004: ANRE accredited the first eligible consumer in the Republic of Moldova
On January 21, 2004 the National Agency for Energy Regulation (ANRE) has accredited the first eligible consumer in Moldova – JSC „Ciment” based in Rezina, that was granted the right to conclude direct contracts with any electricity supplier within the country and from abroad.
This was made possible due to 10% liberalization of power market for consumers connected to 110 and 35 kV electric lines in spring of 2003. To obtain the right to switch to other electricity supplier, the consumer has to meet some main requirements, such as no debts for electricity consumed, financial solvency and other.
Power market is liberalized in order to decrease the electricity prices and attract investments in the sector. Pursuant to amendments to Electricity Law made by the Parliament, power market shall be liberalized by March 2003, the liberalization steps being established by ANRE.
JSC „Ciment” is so far the only one consumer in the republic that applied for accreditation as eligible consumer, the economic entities being reluctant to acquire this right due to handful of local producers of electricity and difficult access to the power markets of neighboring countries. Read further ...
For additional information on Moldova, please refer to the full Membership Profile.
Please, pay attention to our latest Regulatory Exchange Newsletter as well. | 
