Romanian market regulator cuts regulated electricity prices by 1.3% as of July

By bne IntelliNews June 24, 2013

The regulated price of electricity delivered to residential customers in Romania and to those non-residential consumers who do not access the free market will decrease by 1.3% on average as of July 1, market regulator ANRE announced.

The decision was taken following a market review that takes place every six months. No further details regarding the reasons for lowering the prices was provided.

Previous government statements hinted to steeper [5-10%] price cuts as an effect of an ordinance trimming down the support given to renewable energy generators. Separately, the spot electricity prices have decreased sharply from EUR 60 per MWh in mid-2012 to EUR 30 per MWh in May 2013.  

The price in future contracts is hovering around EUR 50 per MWh but inched down to EUR 48.2 for contracts with delivery date in May and will further edge down slightly through the year.

IntelliNews Comment: The recent government ordinance on the renewable energy support mechanism should in principle result in lower energy cost – particularly in lower renewable support overcharge [price of the tradable green certificates outlined in the bills], but this requires a more detailed assessment of the market regulator than the quick decision released on June 21 implies.

Separately, the electricity market liberalisation schedule specifies that starting July 1, the electricity suppliers should buy from the market 10% of the electricity delivered to residential users [from 0% previously] and 65% of the electricity delivered to non-residential regulated users [from 45% previously]. Lower market prices these days, particularly on the day-ahead market, might explain the 1.3% price cut decided by ANRE.

Earlier on June 18, energy minister Constantin Nita said that the residential end-user prices* should decrease by 5-10% as of July as an effect of the government decision to reduce the support given to renewable energy producers. Under the ordinance 57/2013, the government essentially withholds, effective July 1, part of the tradable green certificates handed to renewable energy generators under the law 220/2008. This should surface in lower renewable support overcharge.

Separately, the market regulator can, also as an effect of the ordinance 57 [art. III], introduce a certain share of renewable power into the basket of resources provided at the regulated prices. Wind power has been typically sold at lower prices and this could in principle surface in lower energy price.  

* His statement can be interpreted also as referring to the total cost of electricity [including renewable support overcharge and the electricity price]; the electricity price and renewable support overcharge are both calculated per kWh and the electricity cost [their sum] is largely misinterpreted as an electricity price by media channels.


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