Prices of energy for industrial consumers on the rise

Major producers of coal-based energy have raised their open market prices by about 10-15% compared to last year. These increased costs will in turn affect the major industrial consumers, and many products, goods and services will become more expensive next year.

Energy producers claim that they need to raise prices in order to cover their expenses which they expect to increase in 2010, one reason being the expenses with the purchasing of carbon emission certificates.

Marian Motocu, general manager of the Turceni Energy Complex, said: "All the energy complexes in the Oltenia basin have seen their production costs increase due to amortization expenses and emission taxes. The energy complexes have exceeded their CO2 emission caps in 2008 and they are now required to acquire carbon emission certificates. The Turceni complex, for instance, needs to buy two million certificates for 2008 and one million for 2009. Such a certificate currently costs 15 Euros on average. Also, amortization expenses will also increase 40% next year. I know that suppliers feel that there is no justification for this rise in the price of energy sold on the day-ahead market, I know that everyone is hiding behind the effects of the crisis on the industry, but producers need to make their investments back. The Turceni complex needs to invest EUR 800 million by 2013 just to meet the environmental requirements of the European Union".

All the energy complexes have announced a starting price of 204-205 lei/MWh for next year, and they plan to sell their energy on the Centralized Bilateral Contracts Market (PCCB), managed by OPCOM,.

Mr. Motocu said that the company"s 2009 sales dropped around 14% compared to last year, to around 6.5 million MWh. He said he expects turnover to drop 10%, but he added that profit should meet forecasts.

The General Manager of the Turceni Complex said that the company sent a report outlining the structure of its expenses to ANRE (the energy market regulator), which by the end of the year needs to decide on whether or not it would increase energy prices for individual users and small companies: "The government announced that it does not intend to raise the tariffs for electricity and gas. We are waiting for the decision of the ANRE and we will comply. I have to tell you that production costs will increase in 2010 compared to this year".

In the revenue and expense budget for 2009, approved and published in the official gazette, the Turceni Complex expects 1.83 billion lei in total revenues, and a net profit of 45 million lei. This year, the company allocated 597 million lei for investments, out of which 230 million lei from its own resources and the rest from bank loans. The company does not have any loan installments to pay back this year.