The European Commission is reviewing the contracts concluded by "Hidroelectrica"

The European Commission is reviewing the contracts which "Hidroelectrica" concluded with "Arcelor Mittal" Galaţi and "Alro" Slatina, as well as with some of the retail energy distributors, claiming that they were concluded at below-the-market prices, Joaquin Almunia, vice-president of the European Commission and Competition Commissioner said on Friday.

He said: "I know we are going through hard times, but indirect subsidies are not a solution to solve specific problems in various sectors. Lower electricity tariffs granted to certain players, may lower the costs of their recipients, but they jeopardize competition. We are reviewing a potential aid received by Arcelor Mittal and Alro, by which Hidroelectica gave them discounted tariffs and we are also reviewing the contracts which Hidroelectrica concluded with energy retailers and with other industrial consumers. Industrial consumers in other sectors are affected because they need to pay higher prices as a result of the distortion of the market".

The vice-president of the European Commission said that the institution which he represents has always been vigilant when it comes to indirect state aids, including the cases when they were granted to certain industrial consumers.

He explained: "The problem is that you can"t offer lower prices to specific operators without a clear justification. Creating benefits for certain companies, to the detriment of others, without justifications distorts the competitive environment. When electricity prices aren"t set freely by the market, the entire energy market is distorted and the price of electricity for the other consumers increase (...). I have investigated several cases of this kind in Italy and Greece, we are now looking at other such cases in other states".

At the end of last month, "Hidroelectrica" has declared a force majeure situation, due to the drought, and will therefore reduce the quantities of energy delivered to the company"s clients, which means that this situation may last until the end of the year. As such, "Hidroelectrica" has reduced the energy amounts delivered to customers by as much as 30%. "Alro" has a direct contract for the purchasing of energy from "Hidroelectrica", until 2018.