ACUE: Amendments to GEO 27/2022 Make the Energy Crisis Worse and Bring Additional Vulnerability for End-customers

Amendments to GEO 27/2022, in the published form, will lead to a significant deterioration of the financial situation of the economic operators in the area of energy supply and distribution, as it imposes significant financial and economic losses on them, not recognized by the method of reimbursement or in the distribution tariff, shows a press release of the Federation of the Associations of Energy Utility Companies (ACUE).

• Establishing the average settlement price for electricity suppliers is an unconstitutional provision, contrary to European and national legislation.
• The implementation of the new measures cannot be done overnight, but only after an interval of at least 30 days. Invoicing is made “along the trail”, daily, not at the end of the calendar month.
• The support scheme is extended until August 31, 2023, but there is no budget impact study or guarantee of budgetary appropriations in the documents published by the authorities.
• No immediate solution is proposed to ensure the energy necessary for the operation of distribution networks.

Supply and distribution already register losses of hundreds of millions of euros, as an effect of the legislation in force. Ignoring the real costs goes against constitutional principles, European and national law in the field.

The value of the weighted average price for electricity settlement was established non-transparently and below the market prices, recorded on the trading platforms and highlighted in the OPCOM reports. The authorities have total visibility regarding the evolution of prices on the wholesale market for electricity, but they have not shown any calculations to support the values included in the new regulations. The reality is completely different, and the authorities know the price level at which purchases have already been made. ACUE considers it a cynical decision, the expression of a lack of consideration towards the business environment.

“Losses cannot be imposed as an effect of the legislation. Any intervention in the pricing mechanism must not result in additional costs for market participants, in a discriminatory manner. Such decisions must be clearly defined, transparent, verifiable and non-discriminatory,” says Daniela Daraban, Executive Director of ACUE.

After months of accelerated price growth on the wholesale market, during which the authorities assisted passively, overnight, a maximum price was set for settling the support granted to electricity consumers, below the market price and below the cost paid by suppliers.

The ACUE Federation understands the need to introduce control mechanisms to ensure the avoidance of inappropriate slippages in the value chain of the energy sector, but these measures must be within the constitutional limits, aligned with the legislation in the energy field and calibrated according to the role and challenges of each energy sector.

“With all the responsibility, we feel obliged to point to the risk that, in the very likely situation in which some electricity suppliers will end up unable to fulfil their public service obligations, the specific last-resort supplier mechanisms will no longer work in an effective and efficient manner.

Taking over a very large portfolio of customers by the other designated operators will not be possible, considering the poor financial situation of all energy suppliers and the fact that the lack of liquidity will not allow additional purchases of electricity, at the current prices on the wholesale market,” ACUE specifies.

At the same time, for the energy distribution activity, the adopted solutions come with a delay of 6 months and address only partially the critical situation of distribution operators. For the period in which it was decided to freeze tariffs, the solution of capitalization on difference in costs through the “regulated asset”, which would be recognized subsequently over a 5-year period, is corrected, but no immediate solution is proposed to ensure the energy necessary for the operation of distribution networks.

ACUE requests a review of the new amendments to avoid a full market blockage and discontinuity in energy supply to customers. It makes a new call for responsibility and for a real collaboration between authorities and industry for the joint analysis of data and undertaking the correct decisions. The situation is critical, way too serious and directly affects the continuity of the distribution and supply services.