Key changes or decisions within the past 4 months (April – July)
Starting with July 1, 2004, tariffs for electricity have been increased by 7.8% on the average for captive consumers. Thus, the average tariffs are:
for domestic consumers - 76.5 USD/MWh
for industrial consumers - 70 USD/MWh.
Personnel issues or changes (i.e., new President, Parliament etc.)
Starting with July 12, the new president of ANRE is Mr. Jean Constantinescu, former Director General of CN Transelectrica SA. ANRE vice-president is Mr. Ion Lungu.
Any other new, relevant, important information to convey to colleagues.
The first privatization contract in the Romanian power sector was signed on July 20, 2004: two regional distribution companies will be taken over by the Italian company ENEL. These companies are: Electrica Banat in the Western part of Romania and Electrica Dobrogea located in the Eastern part of the country. The two distribution companies have approximately 1,4 million consumers and cover some 20% in the total of the energy distribution nation-wide.
ENEL has bought 24,62% of the total shares and will increase up to 51% its share hold by direct capital contribution. As well, the Italian company agreed to cover the debts of the two distribution subsidiaries. According to the contract, there is a system of tariff limitation that permits an increment of maximum 4.5% per year during the first three years after privatization. In view of privatization, ANRE issued a set of regulations stipulating that the value of regulated assets is the one paid by the investor. The cost of capital or the capital return will be made by 12% during the first three years and 10% in the next years.
Spring 2004: News from the Romanian Electricity & Heat Regulatory Authority
Prices and tariffs
Starting with January 2004, the tariffs for captive consumers were increased by 10 %. The major causes determining raised costs are: higher fuel prices, increased financial costs due to investments and depreciation. As a result the average prices for residential and industrial consumers become 71.1 USD/MWh and 67.1 USD/MWh.
Market opening
The electricity market was further liberalized by Government Decision no. 1563/2003 to a degree of 40% of the total annual consumption. The minimum consumption in order to be accredited as eligible consumer is 20 GWh/year.
ANRE issued a White Paper regarding the future development of the tariff methodologies and market rules. ANRE has opted for incentive regulation over network activities, namely for the application of a cap regulation. ANRE plans to apply starting with January 2005 a price basket approach for distribution networks and a revenue cap for transmission networks. For the electricity market the main goal will be the gradual establishment of a fully liberalized and competitive market, in line with European practices. In principle, the document foresees the introduction of a bilateral contracts market with self-scheduling of generators, supplemented by a voluntary power exchange (day-ahead market) and a balancing market. This model will therefore be similar to the markets commonly found in Europe, such as Scandinavia, England & Wales, and most of continental Western Europe.
Generation
The restructuring process of the generation sector is going on. In February 2004, two Governmental Decisions were approved, GD no. 102/2004 and GD no. 103/2004, regarding the approval of the privatization strategy in the electricity generation sector and the establishment of three new combined facilities (power plants and coal mines) Turceni, Rovinari and Craiova.
By GD no. 1580/ 23.12.2003 there has been established the Electrocentrale Galati, subsidiary of the Termoelectrica SA company, the thermal power producer. Previously, Electrocentrale Galati was a branch of Termoelectrica SA. The newly established subsidiary was offered for privatization.
Access to the public electric networks
In connection with the Regulation for Access to Public Electric Networks, issued by ANRE and approved through GD no. 867/2003, ANRE has further issued three new regulations:
- Methodology for issuing the acceptance of emplacement by the network operator
- Methodology for establishing the connection tariffs to the medium and low voltage networks
- Methodology for establishing refunds among consumers connected at different stages to the distribution networks.
Privatization of distribution
The Italian energy company ENEL has submitted a firm bid for two of the subsidiaries of the distribution and supply company Electrica SA. Part of the privatization conditions, there are offered 24% of the companies shares, coming next that the buyer will increase through investments his share hold up to 51%.
International cooperation
The European Regulators Group for Electricity and Gas – ERGEG has been established in November 2003. Members of this Group are the heads of the national energy regulatory authorities. Heads of the national authorities from the EEA Member States and from candidate states for accession to the EU participate as observers. ANRE representatives have participated to all the meetings organized by ERGEG up to present.
New legislation or laws
The Government of Romania has approved the GD no. 443/2003 regarding the promotion of the electricity produced from renewable energy source and GD no. 1535/18.12.2003 for the approval of “Renewable energy sources Strategy”. Based on the provisions of these two GD, in February 2004, ANRE issued a paper on the evaluation of the regulatory framework and necessary actions regarding the generation of the electricity from renewable energy sources.
Events
- The workshop Role of the Regulator in the Privatization Process held on February 4, 2004, in Bucharest, hosted by NARUC and ERRA and co-hosted by ANRE. The funding was ensured by USAID,
- The ERRA Committee Meetings in Bucharest held on February 22-24, 2004,
- On February 27, ANRE celebrated 5 years of existence. The most remarkable thing accomplished in these five years of autonomous regulation in the sector was the relationship that the regulator and the market participants have built and developed. The collaboration and sometimes the animated debates were always driven by a common goal that is to find the proper solutions for the Romanian market structure on one hand, and on the other hand to help the regulated companies understand the market mechanisms and to meet their natural desire to exploit every opportunity.
Key changes or decisions within the past 4 months (April – July)
Starting with July 1, 2004, tariffs for electricity have been increased by 7.8% on the average for captive consumers. Thus, the average tariffs are:
for domestic consumers - 76.5 USD/MWh
for industrial consumers - 70 USD/MWh.
Personnel issues or changes (i.e., new President, Parliament etc.)
Starting with July 12, the new president of ANRE is Mr. Jean Constantinescu, former Director General of CN Transelectrica SA. ANRE vice-president is Mr. Ion Lungu.
Any other new, relevant, important information to convey to colleagues.
The first privatization contract in the Romanian power sector was signed on July 20, 2004: two regional distribution companies will be taken over by the Italian company ENEL. These companies are: Electrica Banat in the Western part of Romania and Electrica Dobrogea located in the Eastern part of the country. The two distribution companies have approximately 1,4 million consumers and cover some 20% in the total of the energy distribution nation-wide.
ENEL has bought 24,62% of the total shares and will increase up to 51% its share hold by direct capital contribution. As well, the Italian company agreed to cover the debts of the two distribution subsidiaries. According to the contract, there is a system of tariff limitation that permits an increment of maximum 4.5% per year during the first three years after privatization.
In view of privatization, ANRE issued a set of regulations stipulating that the value of regulated assets is the one paid by the investor. The cost of capital or the capital return will be made by 12% during the first three years and 10% in the next years.
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