The Romanian Competition Council (‘RCC’) recently published its report presenting detailed information on the specific characteristics of the electricity market between 2008 and 2013. The report follows the RCC’s electricity market sector inquiry started in 2009.
Most of the RCC’s recommendations are geared at public authorities and address measures needed to ensure a competitive environment in line with EU requirements. Of note, the RCC recommends that:
- Future energy projects should be correlated with the development of the electricity transport network and, in particular, the enhancement of interconnection capacities with neighbouring countries.
- Restrictions on entering agreements outside the regulated markets should be eliminated. The RCC recommends that the sale of electric energy also be allowed on other trading platforms (e.g. over the counter (OTC) trading systems), and either (i) the restriction on entering commercial agreements outside the regulated market be eliminated, or (ii) a mechanism be created to reduce barriers to export and provide better risk management.
- New financial instruments should be created. The relevant authorities should analyse financial instruments used in other Member States and implement those that meet the needs of the Romanian electricity market.
- Competition on connected markets should be strengthened. The RCC addressed two aspects regarding distribution network services: (i) end-users should be free to choose and pay directly to the third party provider of execution/design of grid connection services (currently the grid operator chooses such provider) and (ii) connected services should be regulated as it is difficult to investigate the existence of an abuse of dominant position (through excessive pricing) in the absence of competitive pressure.
In addition, the RCC also initiated the following two investigations related to the energy market:
- Hidroelectrica SA - The RCC launched an investigation of state owned electricity producer, Hidroelectrica’s long-term contracts, but provided no information on the specific suspected breach. The European Commission is also close to issuing its conclusions on the potential unlawful state aid regarding the same company.
- The energy market regulatory authority – The RCC will investigate the energy market regulatory authority’s regulations which could distort competition and be discriminatory as they (i) introduce priority orders for sale (indirectly establishing the market position of electricity producers) and (ii) include price calculation methodologies leading to a lower price than could be obtained on a competitive market.
The report contains few recommendations aimed directly at companies active on the market (such as, to diversify their electricity generation capacities). However, recommendations aimed at authorities, if implemented, will impact all players on the market, enhance competition and reduce entry barriers.
The full report can be accessed in Romanian language here.