The ANRE is preparing the accelerated liberalization of the energy market

• The number of companies which will pay more for electricity will be higher than initially agreed with the IMF

Hidroelectrica found understanding with the ANRE when it comes to the price and the quantities of hydroelectric energy on the regulated market, sources close to the discussions say. Thus, it is very likely that the ANRE (the regulator of the energy market) will accelerate the rate of liberalization of the electricity market as early as September 1st.

Our sources claim that the percentage of energy acquired from the competitive market will e increased from 15% (as stipulated in the agreement with the IMF) to 18-20% starting on September 1st. This means that more companies than initially set will be required to abandon the regulated price and to choose their own suppliers. As a result, they will pay a much higher price for the energy they are consuming.

The companies which will switch to a price of electricity determined by the free market will have to pay high prices starting in autumn, given the energy shortage created by the hydrological draught, which reduced the output of Hidroelectrica to record levels. For that reason, the ANRE is afraid to implement a sudden price liberalization for all of the companies which are now receiving the energy at a regulated price. The authority is now waiting to see how the market will react after the first stage of the liberalization, in the month of September, to determine the percentage it will implement in January 2013.

The BURSA newspaper recently published that because of the hydrological draught and of the insolvency of Hidroelectrica, the ANRE is also analyzing the possibility of a sudden liberalization of the market, in other words forcing the inclusion in the free market of all the companies which still benefit from a regulated market. These companies are about 600,000 in number, most of them being SMEs and microenterprises.

This more radical measure would be needed for Hidroelectrica to earn more revenue from the electricity sold and to prevent the population from having to bear price hikes because of that.

Except the ANRE does not have an impact study on the economy and the effects of the sudden liberalization.

ANRE specialists and energy providers claim that the shock of the liberalization will not be big enough to cause these companies to default, since supply and demand will stabilize the prices (ed. note: it won't be only consumers that will switch to the free market, but the energy they were consuming as well) and will eliminate the risks of excessive fluctuations in the rates asked by suppliers. Furthermore, company consumption will see a downward trend, in the coming period, not only in Romania, but in Europe as well - a factor which will not put upward pressure on the price at which energy is sold.

What is certain is that the maintenance of the regulated price for the population will not cause sufficient savings to the budget of the households, because we will pay more for the products and services of the companies forced to pay a higher energy price.

The price of energy on the regulated market is approximately 170 lei/MWh. On the free market, the price of energy from the bilateral contracts jumped above 220 lei/MWh (for production only).

The end price paid by consumers from the regulated market is 440 lei/MWh, a level which includes, aside from production, the costs with distribution and transport of energy, as well as the costs of the green certificates.