1、Energy Sector Reform in Romania Regulatory Framework Development and Privatization Process,Florin Gugu Head of Regulatory Dept. RomaniaAthens, 26-27 June, 2007,2,Enel is the third* largest listed utility in Europe with a market capitalisation of EUR 41 billion. The Italian Economy Ministry owns 31.6
2、 %* of the company, leaving a free-float of some 70%, with 2.5 million shareholders. Its 60.000 employees work in 15 countries, producing and distributing power and gas in Europe, North and Latin America. Thanks to the strong commitment to Corporate Social Responsibility, Enel has been included in t
3、he worlds most selective ethical indexes, such as the FT4Good and the Dow Jones Sustainability Index.,A brief overview of Enel,Enel aims to be the most efficient, market driven, quality focused provider of power and gas, creating value for customers, shareholders and people.,* as of 7th July 2006 *
4、21,4% directly and 10,2% indirectly through state-run lender Cassa Depositi e Prestiti,3,Energy Sector Reform,HUGE CHANGES IN A SHORT PERIOD OF TIME,1999-2002ANRE establishmentCONEL UnbundlingSecondary Legislation,2002-2006Market opening Privatization DAM BM GC M,4,REGULATORY REVIEW General Issues,L
5、egal Unbundling New Energy Law 13/2007 sets July 1st 2007 as deadline for the legal unbundling in Romania Distribution Companies will inherit the Distribution Licenses Supply Company will receive a new Supply License Regulated market (mandatory) New Energy Law 13/2007 defines the role of Implicit Su
6、pplier (IS) and Supplier of Last Resort (SLR) No further obligation for National Uniform Retail Tariff System beginning with July 1st 2007Day Ahead Market (PZU) (voluntary) New provisions in Law 13/2007 for consumers greater than 1MW to provide hourly load forecast = PZU contribution will be lower t
7、han 2% of average mix procurement costs Balancing market (PE) (mandatory) possible aggregation between captive, eligible and CPT (network losses); PE contribution will be lower than 2% of average mix procurement costs,5,Regulatory Period: 5 years, except for the first period which lasts for 3 years
8、(2005-2007);Efficiency increase (X factor) of 1% applied only to controllable OPEX;The investors keep the profit accomplished from the efficiency increase over the level settled by the regulator during the first regulatory period; sharing mechanism afterwards;Correction factor on complying with the
9、required minimum level of quality;Technical and commercial losses (CPT): In year 2012, for all distribution operators in Romania, the regulator will accept an average CPT of 9,5%.WACC regulated values (in real values before tax): First regulatory period: WACC 12%; Second regulatory period: WACC 10%.
10、 Initial RAB Value: The sum paid by an investor at the signing of a privatization contract for the purchase of the existing shares and for the newly-emitted ones will be used to settle the initial value of RAB (only for privatizations closed before 2006),Distribution Tariffs Methodology: key princip
11、les,6,Issued on May 2005The methodology will apply until the electricity market is fully openedKey principle: the full pass through of justified costs in the final tariffElectricity acquisition through a portfolio of ANRE regulated contracts (regulated quantities and prices) with generatorsCost for
12、trading on DAM and BM capped at 2.5%Regulated margin is 2.5% of the cost of energy procurementGovernments policy is to maintain a National Uniform Tariff (NUT) for captive consumers, at least until 2007; Achievement of 2.5 % margin through the structure of energy acquisition,Supply Methodology: key
13、principles,7,Conditions in y 2000Historically, electricity prices were among the preferred toolCross-subsidies: Heat Electricity Voltage levels Residential IndustrialSolutionMethodology for cost allocation in the case of CHPsMethodology for cost allocation among voltage levelsSocial tariff (intra-cl
14、ass cross subsidies were preferred against inter-class ones) Direct targeting of social aids after July 1st 2007,Social Protection,8,Bill Standard TariffSocial TariffE kWh/month,Social Tariff,9,AdvantagesIntra-class is less distorting than inter-class cross subsidiesLess birocracy the choice is done
15、 by the consumerMore focused on low-income consumersDisadvantagesStill in contradiction with EU directives = has to be eliminatedNo incentives for energy efficiency improvementsNot always a low consumption reflects a low income,Social Tariff,10,REGULATORY FRAMEWORK Enels Perception,Aligned with EU p
16、rovisions Compliant with primary legislation in Romania Sometimes deviating from the PRG signed with WB Reduced predictability Wholesale market distorted by preferential treatmentRoom for amendments ANRE needs to play a new role Good business up to now + high potential for regional market = We expec
17、t better results for the future,11,In general Stability Predictability Immunity against political factors (regulators independence)As regards regulated businesses Attractive remuneration of the invested capital Pass-through of the non-controllable cost componentsAs regards competitive businesses Cle
18、ar rules Non-discrimination among players,Investors expectations from the regulatory framework,12,Conditions: Regulatory framework not completely issued Lack of any privatization experience record Pressure to do the privatizationInvestors issues Amplified risk perception “Italian regulatory model”Re
19、gulators issues Pressure and responsibility “Single bidder problem”,First privatization,13,Secure the regulatory framework: White paper for distribution tariff methodology White paper for captive consumers tariff methodologyGuarantee the compliance of the newly issued regulatory framework with the d
20、eclared white papers principles Partial Risk Guarantee (PRG) with The World BankRegulatory framework adjustments Comfort Letters issued by ANRE Continuous open channel for communications among ANRE, Enel, WB, GoR and the consultants of all parties,Together solving the problems,14,Partial Risk Guaran
21、tee (PRG) with The World Bank,Signed between: the Romanian Government the World Bank respectively Electrica Banat and Electrica DobrogeaWill cover only limited and pre-defined risks caused by a change, a repeal of or non-compliance with the provisions of the regulatory framework relating to the: dis
22、tribution business supply to captive consumers business,15,Partial Risk Guarantee (PRG) with The World Bank (2),Even if stipulated only with E.Banat & E.Dobrogea,the PRG is a guarantee for the stability of the regulatory framework, and so it supports the entire distribution and regulated supply busi
23、ness,PRG tool used for the first time,Never called, up to now,16,WAS IT A SUCCESS ?,First Privatization in Romania,17,WAS IT A SUCCESS ?,First Privatization in Romania,DEFINITELY YES !,18,Discos Privatisation in Romania,oltenia,banat,dobrogea,moldova,transilvania nord,transilvania sud,muntenia nord,
24、muntenia sud,4 Discos privatised in the period 2004-2005E. Muntenia Sud: privatised in 2007Three remaining Discos to be privatised in 2007-2008,19,The values which drive the Enel development in Romania,People, Performance and Community,20,Drivers of future evolution,Why the South-Eastern Electricity
25、 market is potentially an attractive market for Investors?Significant demand growth potentialStrong need for investment in new capacity to satisfy demand growth in the medium to long termIn the early stages of market liberalization and/or with privatization programs runningInvestments risk mitigatio
26、n for new entrants thanks to EU accession (Romania, Bulgaria),21,There is no perfect regulatory framework What does matter: Stability Predictability Immunity to political influenceHow to measure the quality of the regulatory framework: Compliance with the EU requirements and recommendations Unbundling Market opening Complexity of the methodologies Attractiveness for private investors,Conclusions,22,THANK YOU FOR YOUR ATTENTION!,ENERGY IN TUNE WITH YOU,
