ANRE head Havrilet before the parliamentary committee : EC disagrees of planned requirement for 70 pct exchange-traded gas

The European Commission sent the Romanian authorities a letter to warn that the infringement procedure against Romania for blocking gas exports could move to a new stage if Parliament approves the mandatory trading of 70 percent of gas volumes on the exchange, president of the National Energy Regulatory Authority (ANRE) Niculae Havrilet said on Thursday during hearings in the parliamentary committee inquiring into ANRE’s activity.

This follows the positive opinion issued on October 4 by the Chamber of Deputies’ Industry and Services Committee on the bill approving OUG No. 64/2016, with one of the adopted amendments requiring 70 percent of gas volumes to be traded on the OPCOM energy exchange.

“There is a letter the transport operator unofficially presented us, stating that certain elements in Ordinance 64 approved at the commission’s Oct. 4 meeting run counter to an obligation according to which member states must participate in the internal market by facilitating cross-border trade. Establishing a certain coefficient, which they consider to be high at 70 percent for mandatory trading, would render cross-border trading impossible, and practically hinders export,” Havrilet said in reply to a question by Liberal deputy Lucian Bode.

He mentioned that the European Commission has already started infringement proceedings against Romania on this subject.

“Romania already has a case before the European Court of Justice and this letter mentions that if Romania does not switch to another solution – because the development of the gas market is very important and there is a proposal, namely to use the virtual trading point for title transfers, which would be a better solution than setting a percentage, which is a process somewhat outside experience boundaries – this letter cautions that the infringement procedure could move to the next stage,” said the ANRE president.

At Thursday’s hearings, Havrilet was also asked by Lucian Bode why he believes that after four years during which ANRE’s activity reports were not only approved but also lauded by Parliament, this year’s report was rejected.

Havrilet explained that the moment that triggered disagreements between the regulator and the lawmakers was the complete liberalization of the gas market on April 1, 2017 and another cause that triggered the Parliament’s dissatisfaction was ANRE’s not agreeing with certain provisions of Ordinance No. 64.

“This is the first year when ANRE no longer sets the gas purchase prices, but only checks whether gas purchase costs are in line with the market price, ie they if they are based on weighted average prices,” the ANRE official said.

Whereas before April 1 the gas purchase price was 60 lei per MWh, at the moment of liberalization it increased to 67 lei in summer and to 71-72 lei per MWh for gas delivered in winter.

Havrilet showed that the price rise would have been even steeper had the liberalization not taken place: “If the market had not been liberalized on April 1, the calendar showed that the price should have been 78 lei per MWh by now.”

This led to a increase by 4 – 6 percent of the price for the end consumer in the gas year 2017-2018, Havrilet said.

At the end of September ANRE vice president Emil Calota said the final gas price for households should increase by 6 percent in Q4 this year as a result of market conditions. Havrilet later said that the decision will be taken towards the end of October, and that the price increase will come into force on November 1.

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