"Hidroelectrica", exhausted by the draught

"Hidroelectrica" still doesn't have enough energy to honor its commitments, even though its receiver, Euro Insol, has decided to terminate the contracts with several energy traders, the so-called "clever boys".

Remus Borza, the head of Euro Insol, said: "For the month of August, as part of the 41 bilateral agreements it still has, Hidroelectrica needs to deliver approximately 960 GWh, but due to the hydrological draught, it can't produce more than 700 GWh. Thus, the company has a deficit of approximately 260 GWh which it will have to cover by buying expensive thermoelectric energy, from the open market, which costs approximately 220 lei/MWh".

He hopes that the Romanian Chamber of Commerce and Industry will act quickly and declare the force majeure in August, so that Hidroelectrica will be allowed to only deliver the energy it can produce, under the existing contracts. Otherwise, Hidroelectrica will be forced to acquire energy of over 57 million Euros just to be able to meet the demand for the month of August.

The receiver of the company said: "On July 27th we have asked the Chamber of Commerce and Industry to implement force majeure. Last year, also in July, we asked for the announcement of force majeure as well, but the approval of the Chamber came in September. It took more than two months from the date of the request for Hidroelectrica to implement force majeure, during which time the company spent 753 million lei on acquiring thermoelectric energy at a price of approximately 190 lei/MWh, only to sell it to at the price of 130 lei/MWh based on the contracts with the < clever boys >".

The management of the Legal Department of the Chamber of Commerce said that it did not have the time to go over the documentation sent by Hidroelectrica and that it cannot predict how much it will take for a ruling on the force majeure situation to be reached.

• Negotiations for the regulated contracts have begun

This year, the main problem of Hidroelectrica is the energy for which it has concluded contracts on the regulated market, because most of the direct contracts concluded with the energy traders have disappeared, says the head of Euro Insol, who told us that he has begun the negotiations with the ANRE (the regulator of the energy market), in order to lower the quantities and increase the price received for hydroelectric energy.

Hidroelectrica has sued the ANRE, as the latter set a quota of 5.5 TWh for this year's demand for the regulated market and a price of 72 lei/MWh. Hidroelectrica is asking for the volume to be cut to 4 TWh for the entire year of 2012 and the hike of the price from 72 lei/MWh to 125 lei/MWh. Remus Borza wants to reach a deal with the ANRE to prevent Hidroelectrica from losing money from the regulated market, without affecting the end price paid by the population.

• The force majeure has upset the market

The request of Hidroelectrica concerning the establishment of force majeure starting with August 1st, has upset the entire market, especially since the company put up for sale several small volumes of energy on the OPCOM, which the providers rushed to buy with advance payment, running the risk of not receiving the quantities stipulated in the contracts.

Remus Vulpescu, the receiver of Hidroelectrica, recently said that all of the contracts concluded by the company, on the PCCB market of the OPCOM (the manager of the domestic energy exchange) will not be affected by force majeure.

But the suppliers who concluded the contracts to buy the energy did not receive any guarantee in that regard, and delivery of electricity is set to begin today.

Remus Borza said yesterday that force majeure begins at the time the Chamber of Commerce and Industry announces its approval of the request, and that theoretically, force majeure applies to all the contracts. "We will see how we are going to deal with the issue of the contracts auctioned off on the PCCB", he concluded, and he said that it was very unlikely that force majeure would be implemented starting with August 1st.