Romanian authorities keep mishandling electricity market liberalisation

Romania's energy market regulator ANRE came under fire again on January 5, after it attempted to mend the problematic retail electricity market liberalization by an equally controversial proposal.

ANRE drafted an order that allows households to sign a contract on the free market with a supplier they choose by the end of March (as opposed to the end of January under existing regulations) and avoid the higher electricity price charged by default by the incumbent electricity suppliers as of January 1.

However, energy experts warn that this order visibly favors the incumbent electricity suppliers.

Based on the existing regulations, household clients that haven't chosen a supplier from the free market by the end of December will pay higher prices to their incumbent suppliers until they sign a free-market contract with a new supplier (which can be the incumbent supplier or another one). ANRE's draft order provides that the household clients who sign with their existing suppliers will be able to recover the price difference paid in this period. This option is not available for clients who sign with new suppliers.

Hotnews.ro, which has reported extensively on this subject, notes that ANRE has handled the market liberalization in a way that favors the large incumbent suppliers (Electrica, Enel, E.On, and CEZ). At the same time, the regulator has failed to inform households about this important change.

An interesting fact is that a new entrant to the retail electricity supply market is Hidroelectrica - which made among the best offers to customers in all regions of the country. The mishandling of the liberalization process goes against its interest. The company decided to enter the retail market at the request of the Government last year.

In response to the latest developments, energy minister Virgil Popescu said that the Government would "wait and see" until mid-January, and then decide whether it must step in "to help the households make the best choice."

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