Romania’s energy market regulator inks procedures to cap residential electricity price

Romania’s energy market regulator ANRE drafted the methodology compelling state-controlled power producers Hidroelectrica and Nuclearelectrica to deliver up to 65% of their electricity output to residential users at production cost plus 5%.

The regime, by exception to the liberalised electricity market, will last for a limited period of three years. The methodology is drafted in line with the Government emergency ordinance 114/2018.

Besides having the lowest production costs among all local producers, the two companies are controlled by the state with investment fund Fondul Proprietatea holding minority stakes. Should 65% of their combined output fails to meet residential users’ demand, other power producers with low production cost will be compelled to contribute as well.

As a result of the two large producers, which account for some 50% of the country’s electricity output, committing a large share of their output to the residential regulated market, their supply on the free market will considerably diminish with predictable significant impact on the prices faced by the industrial users. This is likely to result in a general increase in industrial (and later consumer) prices and in possible significant problems faced by electricity-intensive industrial sectors.

The measure will also likely have a negative impact on the two companies’ profitability. Hidroelectrica, in particular, has recorded record profits in recent years and was expected to get listed on the Bucharest Stock Exchange. Nuclearelectrica, on the other hand, is already listed on the stock market.

Market regulator considers setting cost-plus electricity prices in Romania

editor@romania-insider.com

(photo source: Pixabay.com)

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Romania’s energy market regulator inks procedures to cap residential electricity price

Romania’s energy market regulator ANRE drafted the methodology compelling state-controlled power producers Hidroelectrica and Nuclearelectrica to deliver up to 65% of their electricity output to residential users at production cost plus 5%.

The regime, by exception to the liberalised electricity market, will last for a limited period of three years. The methodology is drafted in line with the Government emergency ordinance 114/2018.

Besides having the lowest production costs among all local producers, the two companies are controlled by the state with investment fund Fondul Proprietatea holding minority stakes. Should 65% of their combined output fails to meet residential users’ demand, other power producers with low production cost will be compelled to contribute as well.

As a result of the two large producers, which account for some 50% of the country’s electricity output, committing a large share of their output to the residential regulated market, their supply on the free market will considerably diminish with predictable significant impact on the prices faced by the industrial users. This is likely to result in a general increase in industrial (and later consumer) prices and in possible significant problems faced by electricity-intensive industrial sectors.

The measure will also likely have a negative impact on the two companies’ profitability. Hidroelectrica, in particular, has recorded record profits in recent years and was expected to get listed on the Bucharest Stock Exchange. Nuclearelectrica, on the other hand, is already listed on the stock market.

Market regulator considers setting cost-plus electricity prices in Romania

editor@romania-insider.com

(photo source: Pixabay.com)

Normal
 

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