Electrica sues ANRE for diminishing its profitability

Electrica (BSE: EL) yesterday announced that it had sued ANRE (the energy market regulator) to cancel the order under which it diminished the regulated rate of return applied upon approval of tariffs for the electricity distribution services, according to a report submitted to the Bucharest Stock Exchange.

Similar court actions have been initiated by Electrica’s distribution subsidiaries (Transilvania Nord, Transilvania Sud and Muntenia Nord).

The regulated rate of return for electricity distribution operators in our country fell from 8.52% to 7.7% as of January 1st 2015, following the decision made by ANRE late last year.

This decrease operated by ANRE involves a lower profit for operators (and thus lower dividends for shareholders), i.e. a decrease in the amounts invested and recovered through the distribution tariff charged by companies, according to market sources.