Failure to make accelerated investments in the energy distribution sector could mean that, in the long term, the cost to consumers will be much higher than if they were made, as new technologies, new consumers and new sources of energy, said, on Tuesday, the executive director of the Federation of Associations of Energy Utility Companies, Daniela Dărăban.
According to the latest assessments of ACUE member companies, distribution operators should finance, from their own funds, at least 6 billion euros for the necessary investments in the next 5 years, and the key element for attracting investments is the regulatory framework that should allow the recovery through the distribution tariffs of the current financing costs, from the capital market, according to Agerpres.
“From our point of view, in 2030, with how the energy market is set up and with the need for distribution to completely change its role on the market, if these investments are not made, according to our estimates, the costs will be higher than in the case of accelerated investments. We will not be able to connect new technologies, new consumers or new energy sources. We will have economic losses due to the inability to deliver renewable energy to the network given this potential we are talking about (to be an energy hub – n.r.). Without distribution we will be disconnected from the European system. (…) Our estimate is that the lack of these investments will cost the consumer much more in 2030, both the domestic as well as non-domestic,” explained Dărăban, on Tuesday, in a press conference.
According to her, the impact in the distribution tariff of the tripling of investments from own funds that the distribution operators must ensure would be, strictly on this piece, somewhere at 5 bani/KWh, the increase in the bill, at a consumption of 150 KWh, up to in 2030, being estimated at 8 lei.
“On a basic scenario, on the tripling of the investment level, at least from the own funds that the distribution operators have to ensure, i.e. from 2.3 billion we move to 6 billion euros during the next regulatory period, we are talking about a tariff that can reach up to 2030, but strictly on this piece, somewhere at 5 bani/KWh. at a consumption of 150 KWh, until 2030, it is 8 lei”, said the director of ACUE.
She emphasized that the realization of these investments depends a lot on the regulatory framework, which includes several important elements, such as the tariff recognition methodology, how investments are recognized and the rate of return.
“A fully regulated activity depends a lot on the regulatory framework. The regulatory framework includes some very important elements: the methodology for recognizing tariffs, how investments are recognized and the rate of return. All these documents are currently under debate to establish the framework of regulation for the next regulatory period, i.e. the next five years. If these decisions are not decisions that ensure access to the necessary financing, distributors will probably not find the money necessary to make these investments and we will fall within what will be offered to us the market at the rate of return established by ANRE,” said Daniela Dărăban.
This signaled that the next regulatory period is the most important for the energy sector, because it will ensure, “more or less”, the necessary transition in order to fulfill the objectives already assumed, until 2030-2035, respectively what the distribution operators they will announce as investment plans.
According to the representatives of ACUE, the main pillars of a regulatory framework to stimulate investments are: predictable and adequate tariff methodology for today’s realities in the market and, respectively, the targets of the energy transition; stable regulatory framework with adequate consultation to allow the planning and implementation of investments for the benefit of consumers (with the improvement of distribution service parameters); remuneration rate that makes it possible to attract capital for investments, respectively to cover the growing risks and macroeconomic conditions that have deteriorated compared to 2020 (the year of approval of the current RRR), which investors and financiers must assume.
The RRR calculation, they emphasize, includes a series of indicators such as country/sovereign risk (reflected by the cost of bonds issued by the Romanian state), economic and sector risks as well as loan costs.
The National Regulatory Authority in the field of Energy published, on Monday evening, the draft Order regarding the establishment of the regulated rate of return on invested capital applied to the approval of tariffs for the transmission and distribution services of electricity and natural gas, for the fifth regulatory period, whereby it is proposed to approve the value of 6.94% for the regulated rate of return on invested capital, expressed in real terms, before taxation, applied to the establishment of tariffs for the transmission and distribution services of electricity and natural gas, throughout the period of the fifth regulation, for each of the regulated activities.
“ANRE considered that the value of the macroeconomic indicator should be in accordance with the reality of the national and European economy, in order to avoid the recognition of excessive capital costs within the regulated tariff structure and in order to maintain a balance between the interests of the operators and the users of public services, respectively of final consumers. In addition, the Agency for the Cooperation of Energy Regulatory Authorities (ACER) recommends to regulatory authorities the comparison of parameters with values
used in other EU member states, considering that the comparative analysis is an important tool in defining or approving relevant parameters,” it is mentioned in the project approval Report.