The terms in which the new ordinance amending GEO 27/2022 are unacceptable for all important energy associations. According to the joint statements of Patres and RWEA, ACUE, CRE and the Concordia Confederation, the measures taken without public consultation and in the absence of economic sense will superimpose a new crisis on the top of the existing one, thus leading to the collapse of the energy market.
A new release received by Energynomics on Monday from AFEER further blames the new ordinance.
“Instead of making order and solving problems, the new OUG creates chaos and hits – through the measures adopted – all operators of the energy market, jeopardizing the security of energy supply to consumers in Romania”, says Laurențiu Urluescu, president of AFEER.
The suppliers’ association requests the authorities to revisit the Ordinance, where there are ambiguities, and – within the consultations with the market participants – to find those solutions that ensure the good functioning of the energy market, of operators and the much-needed support for consumers in this period.
“The new GEO 119/2022, a normative act intended to govern the energy market, with a major impact on it, was made in great haste, without a real consultation of the market participants. AFEER members agree that GEO 27/2022 needed to be amended, given the problems it created for both the energy industry and consumers, as well as the state budget. The main goals of the changes were, on the one hand, to find a balance between the budget revenues and the settlements necessary for the support scheme, and, on the other hand, to calm the increase in prices on the wholesale market. Instead, the new GEO 119/2022 not only does not solve the problems, it deepens them and creates new, additional ones. These changes not only do not provide support for all consumers, as was intended since the implementation of the first aid scheme (considering that the number of beneficiaries of the bill capping support scheme is reduced), but, moreover, it hits all operators in the market: producers, suppliers, traders, without taking into account the realities in practice,” says Urluescu.
AFEER members express their disagreement with the haste with which the amendments to GEO 27/2022 were drawn up and adopted, given that, on September 9, an extraordinary meeting of the Energy Council will take place, in which the Ministers of Energy from the 27 member countries of the European Union (EU), will discuss solutions to the current crisis. Moreover, on September 14, during the speech on the state of the Union, when she will also announce the priorities for the following year, the president of the European Commission, Ursula von der Leyen, will present the Commission’s plan for reforming the energy market, addressing energy prices issue.
Total lack of dialogue and transparency
“Energy prices in Europe have already begun to calm, following statements that efforts are being accelerated to mitigate a crisis that threatens to cause recession across the region.
Therefore, our expectations from these very important meetings are that the measures to be taken will be concrete, clear and fast, in accordance with Community legislation. Under these conditions, considering that the energy markets in our country are coupled with those of other EU countries and bearing in mind that the effective measures with a major impact in calming the markets are primarily those taken at the European level, we are convinced that the new European measures will determine the revision of the newly adopted GEO 119/2022.
What we do not understand is the total lack of transparency, the way in which this normative act, which governs the energy market, was developed and approved. There are many unclear provisions in the normative act with a great negative impact on the activity of suppliers, traders and producers, and which, in the end, jeopardize the security of the energy supply of consumers in Romania,” said Laurențiu Urluescu.
The main barriers
According to the new provisions, ANRE analyzes and approves the settlement statements to suppliers, but, in the normative act, no clear deadline is specified by which the Ministry of Energy must make the payments. Thus, payments are uncertain, while the supplier will have to pay on time to producers, transporters, distributors, as well as the state budget. At the same time, the GEO also provides that the maximum value of the weighted average price of electricity at which ANRE calculates the amounts to be settled for electricity is of 1,300 lei/MWh, while even if there are contracts concluded in the previous period with lower prices, in recently market prices have been substantially higher and there is a major risk of losses for suppliers. It also complicates the invoice issued to the final customer even more! An invoice already so quite hard to comprehend.
The new Ordinance makes investments absolutely improbable, because the long-awaited bilateral contracts (PPA) will not be able to be concluded. A producer wishing to invest in new sources of energy generation will seek financing from banks, but will need credit guarantees, the most used guarantee being represented by long-term bilateral contracts of the PPA type. Normally, these long-term bilateral contracts are concluded between the electricity producer and a partner with a good bank rating. The new Ordinance limits manufacturers to conclude directly negotiated bilateral contracts only with end-customer suppliers, network operators and a very small number of consumers. Unfortunately, the old GEO 27/2022 lowered the bank rating of suppliers, due to delays in settling the amounts that should have been reimbursed by the Government. And the new GEO 119/2022 only deepens the impossibility of making new investments, be they classic or renewable.
Perhaps the most serious problem is that Romania risks “turning off the lights”, at least for some consumers. For several years, Romania has been a net importer of energy and natural gas, given that it cannot meet its consumption from domestic production. The formula for determining the solidarity contribution for producers, suppliers and traders provides for charging the difference between the weighted average selling price and the reference price. The reference price is the purchase price of electricity and natural gas, to which a 2% gross margin is added. For transactions at the border, this 2% margin does not cover the costs, which will cause imports to stop, with immeasurable consequences for consumers in Romania, whether domestic or industrial.
“In the context of the reported aspects, AFEER requests the authorities to revisit the Ordinance, where there are uncertainties, and – within the consultations with the market participants – to find those solutions that ensure the good functioning of the energy market, of the operators and the support so necessary for consumers during this period, in accordance with national and community regulations
