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EU probes Romanian hydro electricity producer's long-term deals

25 Apr 2012 19:04:33 | edem

The European Commission is to investigate whether Romanian hydropower incumbent Hidroelectrica engaged in price fixing with customers and suppliers.

In a series of five investigations, the Commission's competition branch will examine whether the state-run company struck deals to buy or sell electricity at preferential tariffs with producers, traders and industrial customers, thereby artificially lowering their operating costs or increasing their revenues. Such activity would breach EU state aid rules, the Commission said in a statement on Tuesday.

"The Commission seeks to determine whether Hidroelectrica has indirectly subsidised clients by selling them electricity at prices below market levels or by buying from them at prices above market levels. Hidroelectrica is controlled by the Romanian state, and there are indications that the State might have influenced its decisions to engage in these contracts on the given terms," the Commission stated.

Hidroelectrica could not be reached for comment by publication time.

The Commission has previously reported its concerns that Hidroelectrica gives industrial users prices below market levels (see EDEM 21 October 2011). Steel maker ArcelorMittal and aluminium producer ALRO Slatina were previously identified by the Commission as two major industrial clients who bought power from Hidroelectrica at preferential tariffs.

Long-term deals below market rates coupled with low hydro generation reserves forced the company to declare force majeure last year (see EDEM 27 September 2011). KB

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