Fondul Proprietatea argues against electricity price regulation
The order issued by Romania's energy market regulator ANRE for delivering electricity to residential users at a cost plus 5% margin price is extremely short-sighted, bringing short-term benefits at disproportionately high costs, Fondul Proprietatea (FP), a minority shareholder in the biggest state-owned power producer, argued in a public message.
FP recommended thorough consultations with industry stakeholders.
Fondul Proprietatea manager Johan Meyer criticized the lack of predictability and the lack of impact evaluation for such measures that unexpectedly put an end to the liberalization of the electricity market that seemed to have reached certain stability. The order is not even in line with the emergency ordinance 114/2018, which ANRE mentioned as the basis for the price regulations, the FP representative stressed. The order, which sets a mechanism for power producers to deliver electricity at a regulated price to residential users, will lead to an immediate price increase in the competitive market, with adverse effects on Romania’s economy.
The households’ consumption accounts for some 18% of the total electricity consumption in Romania, according to the statistics office (January-November 2018 data). The rest of the consumers will buy electricity at competitive prices. Moreover, the order will shake investor confidence in the predictability of energy policies and will lead to decreases in the market value of companies, FP also argues. Furthermore, the ANRE order does not treat all electricity producers equally, placing the burden on the power producers with the lowest production costs.
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