Traders unclear over Romanian export fee as auctions loom

11 June 2014 08:00 Source:ICIS

Concern is growing among energy traders over the elimination of the Romanian electricity fee and its impact on demand for cross-border capacity, with the government yet to officially approve the measure despite approaching cross-border auctions.

Flowing electricity from Romania to Hungary is to cost traders 50% more in July than in June, latest cross-border auction results reveal.

The price inflation came despite uncertainty hampering the scrapping of the Romanian export fee, expected on 1 July but still clouded in doubt, meaning the market could yet see more demand for flows from Romania into Hungary from that date forwards.

The cost of flowing electricity from Romania to Hungary settled at €3.42/MWh for July, up from €2.32/MWh in June, cross-border auctions results revealed on Tuesday.

The country has played a waiting game over the co-generation fee, the last remaining component of the export tariff, with talk of it being scrapped prevalent since the beginning of the year following a 20% reduction on 1 January 2014.

Public statements from prime minister Victor Ponta indicated the fee will be abolished from 1 July 2014 ( see EDEM 12 May 2014 ).

On edge

Traders are now on edge, with cross-border capacity auctions showing a 50% rise in price.

Source said the results indicate either an overpaid capacity price or conflict in traders’ expectations. One trader reported that between the 1-28 June the capacity is reduced to around 65%. For that period the price was €4.69/MWh.

Member of the ANRE board, Zoltan Nagy-Bege, said in an interview with ICIS that once the regulator receives the government-approved bill, it will take around one week to push through the scrapping of the fee. “I believe the order has not been approved yet by the government,” he added.

Nagy-Bege also pointed to pressure from the European Commission for the export fee to be eliminated before Romania couples its electricity market with neighbouring Hungary, Slovakia and the Czech Republic, due to happen on 11 November.

He also added that, with summer holidays coming up for members of parliament, new legislation must usually be implemented before the end of the month.

Head of the Association of Electricity Suppliers in Romania (AFEER) Ion Lungu expressed optimism regarding the measure being carried out as expected. Lungu said: “There is nothing official that there will be [progress], but nothing to indicate that the process has been halted. We are hoping that 1 July will be a possible date [for the move].”

Market sources have said the government will be in talks over the subject later this week. The government was unavailable for comment at the time of writing. Sophie Udubasceanu

By Sophie Udubasceanu