Romania scraps tariff to export electricity

The Romanian government confirmed on Wednesday evening it will from 1 July scrap the last remaining part of the tariff to export electricity out of the country, the co-generation fee.

The measure makes Romanian energy prices some of the most competitive in the region, seeing some €4.00/MWh taken off the export costs, with expectations for electricity flows to start to hit maximum capacity towards Hungary.

The highly awaited move comes after the country has played a waiting game over the co-generation fee, with talk of it being scrapped prevalent since the beginning of the year following a reduction of 20% on 1 January 2014.

Concern was growing among energy traders over whether the elimination of the Romanian electricity fee by 1 July and its impact on demand for cross-border capacity, as the market lacked an official announcement with cross-border auctions taking place on Tuesday. Sources welcomed the news on Wednesday afternoon.

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

The price inflation came despite uncertainty hampering the scrapping of the Romanian export fee at the time, 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 forward.

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.

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

With cross-border capacity auctions showing a 50% rise in price, sources said the results indicate either some overpaying on the capacity price or conflict in traders’ expectations. One trader reported that between the 1-28 June the capacity is reduced to around 65% of potential. For that period the price was €4.69/MWh.

Member of the board of Romanian regulator, 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.

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.

Head of the Association of Electricity Suppliers in Romania (AFEER) Ion Lungu expressed optimism regarding the measure being carried out as expected last Friday. Lungu said: “We are hoping that 1 July will be a possible date [for the move].” Sophie Udubasceanu