The ACUE Federation (Federation of Associations of Energy Utilities Companies) demands the national authorities to treat seriously the need of the energy distribution sector to significantly increase the level of investments, in the next regulatory period. ACUE’s reaction comes after ANRE approved the new regulated rate of return on invested capital (RRR) at a level of 6.94%, applied to the approval of tariffs for the transmission and distribution services of electricity and natural gas, for the fifth regulatory period.
According to ACUE, the rate of return approved by the regulatory authority is significantly lower than the macroeconomic and financial indicators considered by investors.
The ACUE Federation says it has facilitated an open, constructive and professional dialogue between distribution operators and national authorities. The rate of return on capital and the Methodology for setting tariffs for the electricity distribution service, for the 5th regulatory period (2025-2030), are strategic decisions for the energy sector, which must be adapted to current market conditions and the investment needs of the distribution networks, in the context of the energy transition and the increasing role of renewable energy. Otherwise, neither household consumers nor the business environment will fully benefit from the advantages of the energy transition, because the critical prerequisites for the substantial investments needed to transform, flexibilize and digitize distribution networks are not created.
According to ACUE, the rate of return on capital is an essential financial indicator for covering the costs of attracting the necessary capital for investments in the sector, in the next five years. The reality is that, in recent years, economic conditions at the national level have deteriorated significantly. A relevant example is the increase in the cost of borrowing for the Romanian state, but also for private sector companies. Surprisingly and unjustifiably, the rate of return approved by the regulatory authority is significantly lower than the macroeconomic and financial indicators considered by investors.
Under these conditions, a mechanism to stimulate investments dedicated to the energy transition, established in a transparent way through the tariff setting methodology is essential. In order to facilitate access to financing, in addition to covering the much higher costs of financing investments compared to the past period, such a mechanism should provide clarity and predictability, implicitly ensuring the reduction
risks and uncertainties associated with investments in the energy distribution sector, according to ACUE.
“Although the natural recommendation would be to create a regulatory framework that guarantees the continuity and coherence of policies, inexplicably, in the document published by ANRE for public consultation, the incentives in force have been either eliminated or modified in a way that discourages investment. We welcome the regulatory authority’s announcement to correct this situation and await an official decision in this regard,” said Dana Dărăban, executive director of ACUE.
According to ACUE, the authorities must align their decisions with the present economic realities, in order to create a favorable and sustainable regulatory framework. Moreover, the entry into force of Regulation (EU) 2024/1747, on improving the organization of the Union’s electricity market (the “Regulation”) brings firm and imperative rules, directly applicable in the member states and whose compliance is mandatory.
The Regulation explicitly states that tariff-setting methodologies must reflect the fixed costs of transmission and distribution operators, including capital and operational expenditure, to provide adequate incentives in the short and long term. The regulation emphasizes the central role of the regulatory authorities in ensuring sufficient investment for the development, expansion and strengthening of the network.
The methodologies at the national level must encourage the modernization of existing networks, the integration of new technologies (charging stations for electric cars, heat pumps, etc.), the production of renewable energy (including prosumers), the use of flexibility services and the facilitation of energy storage, while promoting anticipatory investments.