After 50 million lei loss of in the first quarter of the year, the Electrica group continues to lose blood because of the electricity price hikes in the spot markets; it announced a net profit of just 8 million lei in the first half of the year, by 328 million lei lower (-97,6%) than that in the first part of 2016.
The decline was generated by the significant adverse conditions in the first quarter and a very sluggish improvement in the second quarter of 2017, the Investors’ Report submitted by Electrica said. “During January-March 2017, there was a substantial increase in the purchase price of energy, namely by 78% on the Day Ahead Market and by 38% on the Balancing Market, compared to the same period of the previous year. In April-June 2017, the average purchase price of energy remained by about 30% higher than in the same period of the previous year.”
The cost of electricity purchased increased by RON 200 million (+15%) to 1.53 billion lei in the first half of 2017, compared to 1.33 billion lei in the S1 2016.
In the Investors Report, General Manager of Electrica Group Cătălin Stancu said that “the need to improve the functioning of the existing energy market framework for preventing possible similar situations has become stringent.”
In mid-July, Cătălin Stancu said that ANRE and the Competition Council should consider the opportunity to take price capping measures in the short term, until the market situation is clarified. “From my point of view, for us, at Electrica, the situation is extremely serious. Now, the question is how serious it is for everyone, for if everyone in the industry says ‘yes, it’s serious’, and if those in the industries that depend on the cost of energy say it’s serious, I think there are enough elements [to apply such an administrative measure]”, Cătălin Stancu said on July 13, as quoted by Agerpres.
On the other hand, the distribution sector is again returning to normal profitability levels, the company said: “revenues increased by 4% as a result of a 4% increase in distributed volumes, mitigating the negative effect of lower tariffs.”
In S1 2017, the Electrica group distributed about 9 TWh (up 4% compared to S1 2016) to about 3.69 million users. Electrica Furnizare is leader on the regulated market, with a share of 39.62%, while on the competitive market it holds a 12.77% share in 2017, according to the ANRE report in March.
On 10 August, Electrica’s Board of Directors approved the reorganization plan in the distribution area for implementing a “re-engineered process model focused on efficiency and quality of customer service”. Some activities of Electrica Serv will be internalized for contributing to achieving the very ambitious investment plan next year (a 863 million lei CAPEX). A new concept of performance-based remuneration and a concept for cost reduction and control will be introduced, Electrica officials say.