The Federation of Associations of Energy Utility Companies (ACUE) draws attention to the major risks posed by unpredictable regulations and successive administrative interventions in the energy sector which, in the absence of a sound economic rationale and a real dialog with the industry, risk prolonging existing imbalances and affecting the normal functioning of the market.
According to a statement by the federation, the negative impact of unpredictable regulations and legislation continues to represent the biggest risk for the Romanian energy sector, as well as the most complex obstacle to its development.
The electricity and natural gas supply sector is the most competitive segment of the energy market and is, in reality, the area where competition operates. In contrast, the production sector is characterized by a limited number of producers, which structurally places Romania in a seller's market. This imbalance is directly reflected in the prices formed on the wholesale markets. It is essential to emphasize that approximately 501TPTP3T of the final price invoiced to consumers is represented by the commodity price - i.e. the cost of purchasing electricity and natural gas. Attributing price increases exclusively to the supply margin shows a limited understanding of the real price formation mechanisms, the structure of the bill and the economic factors influencing the energy market. The promotion of such interpretations, even through published and withdrawn draft legislation, creates major risks for the sector and sends profoundly inappropriate signals to the market
it says.
ACUE representatives emphasize that energy suppliers have the role of purchasing energy from wholesale markets, managing commercial risks (price, volume and imbalance) and building competitive offers for end customers, while they compete for and retain customers and ensure direct relations with consumers through billing, collection and customer service.
„Suppliers do not set the wholesale market price and do not control regulated costs such as transmission and distribution tariffs, taxes and VAT, and the supply margin is structurally limited in a competitive market”, says the source.
ACUE also points out that the role of the state in the energy market must be that of architect, guarantor and arbiter of the proper functioning of the market, not as a discretionary actor in the formation of commercial prices. Legislative changes must be based on rigorous economic analysis and real consultations with market players, and public policies must stimulate investment in new production capacity, diversification of sources and increased market liquidity.
„Consumer protection, especially for vulnerable consumers, must be achieved through targeted, transparent social policies financed from the state budget. Transferring social obligations to commercial actors or substituting market mechanisms with generalized administrative measures distorts price signals and affects the proper functioning of the market. In Romania, the state has decided that providers should pre-finance social policy schemes by applying ex-ante cap and offset mechanisms. For four years, social protection was in fact achieved at the expense of energy suppliers, who pre-financed the capping of final prices for all customers”, underlines the ACUE press release.
According to the cited source, at present, the state's arrears to suppliers amount to about 10 billion lei, without a concrete decision on unblocking the validation and payment process.
„The suppliers do not create the energy price, but transfer and optimize it for the consumer within the limits of the market, but the name of the supplier appears on the final bill. For this reason, suppliers absorb much of the public tension associated with price increases, even though they control only a fraction of them. Exploiting public confusion through policies built on false premises is not only harmful but irresponsible. All these practices contribute to gross misinformation of the public and ignore the economic realities of the energy sector. Public policies based on false premises risk distorting the market instead of providing real and sustainable solutions for competitive prices in a liquid wholesale market”said Dana Dărăban, Executive Director of ACUE.
Representatives of the federation also say that for prices to form correctly, the market needs, first and foremost, liquidity, both in the natural gas and electricity sectors. Romania remains a net importer of energy and past experience shows that the sustainable solution is not administrative intervention, but correcting structural imbalances by increasing domestic capacity and reducing dependence on imports.
„ACUE remains open to institutional dialog and supports balanced solutions that protect consumers without compromising the functioning of a stable, liquid and predictable energy market. Predictability, transparency and respect for competitive market principles are essential for the proper functioning of the energy sector and for the real benefit of consumers”, reads the press release.
ACUE is a representative federation of the electricity, oil, gas and energy mining sector, representing the interests of major companies in the generation, distribution, supply of electricity and natural gas and related services. ACUE represents 23 companies in the energy sector, with more than 25,000 employees and an annual turnover of more than €5.5 billion.
On Wednesday evening, a draft ordinance was published on the Energy Ministry's website, according to which the commercial surcharge applied in the wholesale and supply of electricity and natural gas to end consumers would be limited to 3% and 5% respectively for a period of 12 months. Shortly after, the draft was withdrawn, with the ministry claiming that it was published due to a clerical error, according to Agerpres.
„The Ministry of Energy managed, over several months, an extensive process of analyzing several scenarios aimed at ensuring lower energy prices for all Romanians. These steps were based on constant consultations with all relevant players in the energy market and the integration of the proposals received into an internal technical process. The document temporarily posted on the website was published due to a clerical error. It was withdrawn as soon as the situation was identified in order to avoid misinterpretation”explained ministry representatives.