Electrical power market 55% liberalised

As of yesterday, the Romanian electrical power market was 55% liberalised, in line with a government decision approved during the government session of late last week. For the first part of this year, market liberalisation was 40%. Romania has pledged to completely open up its power and gas markets by 2007, the year scheduled for EU integration.

The degree to which a market is liberalised in effect expresses the weight of eligible consumers as part of total domestic consumption for the year prior to the opening of the market. In other words, consumers on the free market will have a joint maximum consumption of 55% of the consumption seen for 2003.

Eligible consumers have a major advantage over consumers that are captive in distribution networks in that they can negotiate quantity and acquisition prices directly with suppliers. The price settled for captive consumers, however, is equal to a maximum price levied for free market consumers.

Following the liberalisation of the electrical power market, the National Power Regulation Authority (ANRE), will only settle distribution and transportation tariffs, while electricity supply prices will be decided on the basis of supply and demand.

Starting in 2007, industrial and household consumers will both have the freedom to sign contracts with any available power supplier.

Eligible consumers are companies that register a minimum consumption threshold established by the district authorities.

They gain this status on the basis of criteria set by ANRE, which include a minimum consumption of 20 GWh per year and a lack of any debts to utility companies.

Romania currently has a higher degree of openness in comparison to other markets in the region. In the longer term, the power sector is due to be 80% liberalised by end of June 2006 and will reach 100% by 2007.

On the gas market, liberalisation will be raised to 50% by the end of this year, and to 75% as of end of June 2006. The market will also be 100% liberalised in 2007.

Some analysts have pointed to the fact that market liberalisation is in danger of colliding with the privatisation process in progress in the two domains and have drawn attention to some pre-existing anomalies on the free power market.