Acasă » Electricity » The competitive market needs time to work properly

The competitive market needs time to work properly

30 September 2021

Zoltan Nagy-Bege has been the Vice-President of the National Regulatory Authority for Energy since 2017, but he has been working within ANRE since 2007. Throughout this period, one of the noteworthy achievements of Mr Zoltan Nagy-Bege refers to assuming the responsibility of being a good interlocutor, focused on constructive dialogue with the energy organizations, therefore substantially contributing to the clarification of the primary and secondary legislative framework in the electricity, heat and natural gas sectors. Last but not least, it should be also noted that Zoltan Nagy-Bege is the main voice of ANRE regarding the energy markets liberalization process in Romania. We exchanged some ideas regarding his main areas of responsibility within ANRE.

Dear Mr Zoltan Nagy-Bege, we are starting from the energy prices liberalization process, which currently overlaps a strong upward trend in both electricity and natural gas prices. Which is the current situation in the two markets? How many household consumers are still in the universal service regime?

Given the data we have available regarding the situation of household consumers’ contracts by the end of August, they indicate that 57% of end electricity consumers and more than 43% of gas end consumers have moved to the competitive market, by choosing a competitive offer among those available in the market. It should be noted however that a large part of the end-consumers (over 90%) did not change their supplier, this category preferring to continue the contractual relationship with the same company, but based on a competitive contract. Therefore, while in the electricity market out of 9 million household consumers, 3.8 million consumers haven’t taken yet this step to competitive contracts, in the natural gas market out of 4 million household consumers, 2.2 million haven’t signed yet a contract in the free market. An increased household consumers’ interest for competitive offers, both for electricity and natural gas, was noted in June, following the notification sent by suppliers on prices applicable from July 1st, which increased, this fact stimulating end-consumers to take the step towards the competitive market. This increase is in the case of electricity by 1-7%, depending on the supplier of last resort, and for natural gas 17% on average. While in the case of electricity, by June, the monthly average of transfer to the competitive market was about 250,000 contracts, in June over 400,000 contracts were signed. In the case of natural gas, the monthly average was 50,000 and in June we had over 200,000 new contracts. This data confirms once again that price is one of the most important drivers for consumers to change their contract or supplier.

Have you verified how the commercial discount was applied by suppliers to cover the difference between the price related to the universal service offer and the price in the competitive offer with the lowest value on January 20, 2021? What are ANRE’s conclusions?

All suppliers of last resort that have assumed that discount allowed under the regulation issued by ANRE have kept their word and applied the discount. It is also relevant to mention that this discount had rather a psychological effect among end-consumers given the fact that in many cases the differences between prices were not significant.

There are again voices calling for capping/freezing energy prices. Have there been discussions in this respect involving ANRE?

We have not had such discussions and I hope we will not have any in the future, because our point of view was and continues to be very clear in the sense of supporting the elimination of regulated prices and any interventions in the functioning of the wholesale and retail markets, except for financial and non-financial aids granted to vulnerable consumers. Maybe such a measure would calm things down in the short term, but it would certainly be a mistake difficult to repair in the medium and long term, especially an intervention on the wholesale markets. I believe the competitive market needs time to work properly and to show us all the beneficial effects of a free market, in this time any intervention from authorities is not being indicated. It would be a very bad signal for the investors who show interest in carrying out new investments in production capacities in Romania, being the only solution to solve our electricity deficit. This electricity deficit is actually one of the factors that generated this rampant increase in prices in the energy market. Other factors to mention here are the growing demand, the evolution of the price of carbon emission allowances and the evolution of prices on the markets of the other European countries we are interconnected with or with which we have common markets. Let’s not forget that such intervention measures in the electricity or natural gas markets must be notified to the European Commission, which I don’t think will condone a new return to regulated prices.

Romania announces more ambitious targets in terms of energy from renewable sources, but the main support measures for new investments of this type are still missing. What can ANRE do and what does it prepare to encourage what is already called “a new wave of renewables in Romania”?

If by support measures we refer to investment or operational aid schemes, indeed, we don’t have clear signals from the Romanian authorities whether they will exist or not. Probably there will be investment aids through the various support mechanisms made available by the EU, such as the NRRP, which is still being negotiated, or the Modernization Fund, whose budget was unexpectedly increased as a result of the increase in the quotation of carbon emission allowances.

With the operational aids of the type of Green Certificates, Feed-In Tariff or Contracts for Difference, the situation is slightly different. Personally, I don’t encourage such schemes, except for contracts for difference, given that they unavoidably affect the final bill to energy end-consumers, both household and non-household consumers. What does ANRE do? We defined the long-term contracts that, based on European Regulation No. 943/2019 on the internal electricity market, directly applicable in Romania without transposition in the primary or secondary legislation, can be concluded bilaterally outside the electricity exchange. It is a tool insistently requested by potential investors since 2012 when bilateral contracts on the wholesale market were prohibited under the Electricity and Natural Gas Law. Therefore, we have created the possibility for investors to use these contracts, which can be concluded even in the project phase, to obtain the necessary funding for carrying out their projects. We have implemented and as of February 1st, 2021 we apply the rules on the balancing market provided by the same Regulation (EU) No. 943/2019 and, based on continuous monitoring of results in the balancing market we make adjustments to the balancing mechanisms to ensure the security of the national energy system through the accountability of market participants, also bearing in mind the interest of producers and potential investors in new electricity production capacities. We have also amended the Regulation for connection to power grids, to cut the red tape and simplify the process of obtaining connection permits by investors and we continue to pay attention to the requests coming from the market to adapt regulations to investor’s needs. We are working within our responsible department on a draft order, which will soon be submitted to public consultation, through which we will force network operators (distribution and transmission) to monitor, report to us and publish the capacities available in their networks so that we can give a clear picture to the stakeholders over the possibilities to connect power plants to the network with or without network consolidation throughout the country. Basically, ANRE has always been and will remain open to dialogue with all parties concerned. I take this opportunity to re-express our availability in discussing any problems faced by investors, precisely to support them, to simplify and to speed up the construction of new production capacities for clean electricity, which would help us in both reaching the targets assumed at the EU level and in stabilizing the evolution of market prices.

What are the elements that are still blocking a greater expansion of the small-scale distributed energy generation from renewable sources? What can ANRE do to support the development of this sector?

I am convinced that distributed energy generation is one of the efficient and economically advantageous solutions for developers and we already see many projects completed by both individuals and companies that understood the importance of energy efficiency being interested to invest in such solutions. From my point of view, the biggest difficulties are in their integration into the national energy system, connection to distribution networks. Distributors also understand that it is one of the future solutions for which they need to prepare by making investments in a first phase and even adapting their business model in the medium and long term, insofar as these solutions will multiply. Some distributors, through the companies in the groups that own them, already promote and provide this type of solution for their customers. Problems aroused especially in the case of household consumers, where we simplified the connection procedure as much as possible, a context which resulted in many complaints from various beneficiaries according to which, the distribution companies do not comply with the new rules on the connection of prosumers to the distribution network. The referrals were analyzed and solved on a case-by-case basis and I am convinced that each case helped and will continue to help in improving the distributors’ approach. Unfortunately, the program carried out by the Environment Fund Administration (AFM) is not performing as expected. There are long delays in approving files and payments, blocking companies with the capacities’ construction, the experience and expertise in this field, thus affecting those who do not necessarily want to use the AFM Green House program.

Have there been discussions at the ANRE level to introduce quantitative compensation of energy delivered in the national distribution system – a project that is included in the government program?

Unfortunately, we were not consulted before including this provision in the government program. Subsequently, we had discussions within the institution, and also with Government and Parliament officials, to which we presented our point of view regarding the various ways in which this problem can be addressed. Irrespective of the chosen approach, it is necessary to amend the primary legislation and even to notify the European Commission, given that it is considered state aid, in conjunction with the fact that there are also fiscal issues, with impact on the state budget. It is a quite complex problem, a measure that most EU Member States which are currently applying it have started to give it up.

You have been the Head of the Energy Efficiency Department within ANRE for five years. The theme has been taken over since 2020 by the Ministry of Energy. Is energy efficiency still a topic of interest for you? How do you see the evolution of approaches in this regard?

Energy efficiency definitely remains a topic of interest for ANRE, even in the context of the last year’s legislative amendments, being a national target in the energy field, which must be respected both at an institutional level and at the level of end-consumers. Therefore, ANRE continues to be responsible for monitoring the state aid bonus scheme in the field of high-efficiency cogeneration and reports the annual savings of primary energy to the national and European fora.

At the same time, from the point of view of energy efficiency, district heating systems are considered the most adequate heating option for urban agglomerations. To this end, ANRE prepares and sends to the National Institute of Statistics annual reports on capacities and production in district heating systems, to fulfil the reporting obligations provided by the Energy Efficiency Directive. If we mention energy efficiency in the case of electricity and natural gas transmission and distribution operators, as of January 1st, 2021, licensed operators revise and submit to ANRE, every 2 years, the Report assessing the potential to increase the energy efficiency of electricity and natural gas networks and the Program of measures and annual investments to improve the energy efficiency of networks, and the deadline this year was June 30. The status of implementation of smart electricity metering systems for 2020 is highlighted in the Annual Activity Report of ANRE already published on ANRE’s website. If we look at the recent evolution of electricity and natural gas prices, which will obviously influence both the costs of thermal energy delivered in a centralized system and the costs of individual heating solutions, I expect the importance of energy efficiency measures to increase soon. This applies to both household consumers and non-household and industrial consumers. As a side note – two years ago I stated that the main barrier in the way of energy efficiency in Romania was represented by much too low energy prices, a statement that has sparked not very positive reactions. I continue to support this statement, but I think the period of cheap energy is over in Romania, and with this context, I expect energy efficiency to be given the attention it deserves that I have repeatedly mentioned over the years.

What obligations are left to ANRE in terms of energy efficiency?

In consideration of provisions of Article XVI of the Government Emergency Ordinance No. 1/2020, on fiscal and budgetary measures and amending and supplementing certain legal acts, published in the Official Journal no. 11/09.01.2020, ANRE’s attributions regarding energy efficiency were entirely taken over by the Ministry of Energy. In this context, I mention that ANRE no longer has attributions in the certification of energy managers and authorization of energy auditors, and requests regarding energy manager certificates, authorization of energy auditors, individuals and legal entities, authorization of companies providing energy services and, respectively, the extension of such documents, as well as any other requests of clarifications regarding the energy efficiency field, are submitted to the attention of the Ministry of Energy.

I remember that at the 2019 Energynomics Awards Gala, before the attributions in the field of energy efficiency were taken over by the Ministry of Energy, I presented a top priority for ANRE, where the field of energy efficiency obviously held a leading place. I was stating then that for 2020 for ANRE was a priority to transpose the three provisions in the Clean Energy for all Europeans package, which had the transposition deadline the year of 2020 – the Energy Performance of Buildings Directive, the Renewable Energy Directive and, respectively, the Energy Efficiency Directive. In my speech, I also stressed the fact that ANRE’s experts were actively involved in inter-ministerial working groups for drafting laws transposing those Directives and I reaffirmed my confidence that the new Laws would help Romania meet the 2030 targets on renewables and energy efficiency. Even if ANRE no longer has prerogatives in the field of energy efficiency, I personally continue to consider this area to be of major importance and indispensable both in achieving Romania’s goals at the EU level, but also in the context of the energy transition.


This interview firstly appeared in the printed edition of Energynomics Magazine, issued in September 2021.

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