On Thursday, the National Energy Regulatory Authority published, in public consultation, a draft Order regarding the introduction of a guarantee for contracts concluded on electricity markets in the form of a percentage of the value of the contracts, the proposal being that this guarantee be 30%, stated, in a press conference, the president of ANRE, George Niculescu.
“The second thing I want to talk about is the Order published today in public consultation on the website of the National Regulatory Authority. It is about the introduction of a guarantee for contracts concluded on energy markets, in the form of a percentage of the value of the contracts. The proposal of the Regulatory Authority is that this guarantee should have a value of 30% of the value of the contracts”, said George Niculescu, according to Agerpres.
He emphasized that, since 2018, on the natural gas side, this guarantee for contracts exists in the form of bank guarantee letters or amounts of money deposited by those who trade.
“We are trying through this measure to improve the trading method in the sense that, I believe, the energy market in Romania is in a process of maturation, and the introduction of these guarantees does nothing but establish clearer, firmer rules in the electricity market. Usually, the lack of guarantees, obviously, can lead, theoretically, to greater liquidity, but the failure to engage in a guarantee can ultimately also represent a form of non-compliance with the contracts agreed by the parties. We believe that it is a measure that will, I repeat, lead to, or contribute to, the process of maturing the energy market,” explained the ANRE president.
He added that consultations will be held on this subject, because it is not desired to introduce obstacles to trading on the energy market, and all “pertinent, reasoned” observations that will come from suppliers and traders will be analyzed and, if it is demonstrated, argued, that the percentage is too high, ANRE “will not be an obstacle to the proper development and conduct of activity on the energy market.”
“We need to think about the correct way of operating the energy market. (…) This percentage is not mine, or the authority’s, it is a proposal that we make to the participants in the energy market. If the participants in the energy market, with arguments, will demonstrate to us that the percentage is too high, obviously we will not be an obstacle to the proper development and conduct of the activity in the energy market. But some form of guarantee for the product you want to buy, from our point of view, must be implemented. If we think that at the moment you can contract a quantity of electricity with delivery in two years, and after a year and a half, if the price condition is advantageous, sell that quantity of energy earlier, recording a profit without incurring any expense, from our point of view it seems to us that it must be regulated, considering that there are already some guarantees implemented for gas since 2018. This level of 30%, whether it is high or low, remains to be seen the market’s reaction and let’s determine it, with arguments,” Niculescu pointed out.
According to the draft Order published on the ANRE website, “the standard sale-purchase contract whose delivery period start date is greater than one month and the delivery duration is at least 3 months, must provide for the payment by the buyer of an advance representing 30% of the total value of the contract, with the remainder to be paid according to the established contractual terms.”
The approval report specifies that the draft order introduces additions to the existing provisions regarding the guarantee of electricity transactions on forward markets, concluded through standard sale-purchase contracts, as well as through contracts based on the framework contract for the sale-purchase of electricity on PCCB-LE-flex, with the payment of an advance representing 30% of the total value of the contract.
“In the context of market volatility and financial risks associated with non-payment of contractual obligations, it is necessary to strengthen the mechanisms for guaranteeing transactions on forward markets. Current regulations provide for the use of financial guarantees in various forms, but these are not always sufficient to prevent the risks of non-payment. Also, another context for introducing an advance payment is the increased risk of concluding transactions on forward markets, for speculative purposes, by purchasing significant quantities of electricity, without using it,” the cited document states.