Romania to debate shock revival of electricity export fee

LONDON (ICIS)–Romania is considering a shock reintroduction of its electricity export tariff, ICIS has learnt.

The tax would add more than €10.00/MWh to the cost of sending power out of the country, effectively adding this on to the price paid on the other side of the border.

The Romanian parliament will debate a recent draft proposal on the tariff’s reintroduction in early June, sources close to the matter have confirmed.

Although there is much scepticism that the tax will be forced back into place, with the proposal already coming under fire from a number of sources.

Shock

The controversial idea will shock many market participants because Romania scrapped its export tariff back in July 2014 to allow it to join the 4M market coupling project with Hungary, Slovakia and the Czech Republic.

The dropping of the tax paved way for a more profitable spread to the more expensive neighbouring Hungarian market and resulted in higher Romanian exports.

The newly-proposed tax would amount to €11.70/MWh in 2018, increasing to €12.50/MWh in 2019 and €13.00/MWh for exports in 2020 and 2021, according to a trader familiar with the draft.

This is significantly higher than a €4.73/MWh export tax in Bulgaria – the only country in the EU to still have an export fee, at least for now.

The Hungarian forward curve is currently priced around €6.00/MWh above Romania. The tax’s reintroduction would therefore eat away the margins of Romanian traders exporting to Hungary.

The draft proposal was made recently by parliament members with a more detailed debate set to take place on 5 or 6 June.

Scepticism, opposition

But despite the advanced stage of the proposals, market participants doubt such a measure will be reintroduced to the Romanian electricity market.

The country’s electricity suppliers association AFEER has sent a letter to parliament outlining a number of reasons for opposing the move. The letter is not publicly available but a source at the association confirmed its key points, which include:

• Adding an exported energy supplementary cost will reduce the country’s exports of electricity

• The price coupling mechanism is not compatible with export taxes

• Romania will no longer be able to join new cross-border projects, such as an integrated intraday power market

• Most exporters are currently unable to buy green certificates because access to this market is mostly limited to suppliers delivering to end-users.

This means one of the potential benefits of the proposal – more green energy remaining in the country and therefore more green certificate trade – is not plausible

• The measure would mainly affect coal-, gas- and other fuel-fired producers, which would have to sell at lower prices to traders that were exporting, because the exporters would have to pay the extra tax

‘Fully destroy exports’

Romanian traders have also slammed the proposals.

While remaining sceptical that the proposal will move forward, a first trader stressed that current Romanian legislation would allow for a number of market modifications in case the draft is approved, including pulling the country out of the 4M coupling project.

“[If the proposal is passed] this will fully destroy exports and the market in general,” he said.

A second trader said such a measure would significantly affect the market in a negative way.

“It was a step forward when import-export fees were removed. Now if they put them back, it will be a step back with much more negative consequences.

“If you put export fees in place, you take away any incentive in investing in new power capacity in Romania,” he said.