Fair Gas Prices. Illegal tariffs charged by operators in the gas sector with the tacit support of ANRE, up to USD 1bn

by Dumitru Chisalita, energy expert

11 years ago the first gas law was approved, which introduced the notion of regulated activities, monopoly activities, for which ANRE, as competent authority in the field, approves tariffs. However, distribution operators have established tariffs by themselves for related monopoly activities, collecting from customers in this period, illegally, up to USD 1bn. Gas distribution is a public service of national interest in which a regulated activity is carried out by a licensed distribution operator. The distribution operator provides the distribution service for all users of the distribution system, in non-discriminatory conditions, ensuring access to it for any applicant that meets the legal requirements, in compliance with the performance rules standards stipulated by the technical regulations in force. Law 123/2012 determined that many of the activities required to be carried out by distribution operators be placed in the area of competitive activities, which can be carried out by any authorized company, including the distribution operator. A number of activities remained to be carried out exclusively by the distribution operator. Such activities are: the commissioning of the use installation, commissioning on branching, following up the work by the operator etc. In the gas distribution activity, holders of gas distribution licenses are required to carry out activities related to system operation, according to specific regulations drawn up by ANRE, within the limits set under the conditions of validity associated to the license, in accordance with the provisions of art. 138, paragraph (1), letter j of the Electricity and Natural Gas Law no. 123/2012. Provisions of art. 179, paragraph (2) of the Electricity and Natural Gas Law no. 123/2012, stipulate: “In the regulated market that includes natural monopoly activities, the associated activities and supply at regulated prices and based on framework agreements, pricing systems are set by ANRE” (This provision existed also in the previous law valid as of 2004). In the current practice, holders of gas supply distribution licenses launched and charge a number of tariffs for various activities that must be carried out according to regulations in force. Until the time when ANRE sets tariffs for the activities related to the operation of the distribution system, tariffs set by distribution operators and charged to customers in the past 10 years are illegal. We estimate that amounts illegally charged by distribution operators in the past 10 years amount to USD 50-100mln/year. As long as these tariffs were modest, they were paid by customers without any reaction. When these tariffs reached very large amounts, there were some (very few) customers who complained about irregularities, including before ANRE. Thus, office activities of distribution operators cost the double of actual design, construction activities etc. ANRE is aware of (recognizes) the illegal charge of tariffs for associated activities practiced by operators, the proof being the letter sent (in July 2013) to operators, urging them to comply with the law and to no longer charge tariffs for associated activities, but hasn’t done anything to stop this practice. Excerpt from ANRE letter, sent to distribution operators in July 2013, is extremely explicit: tariffs for activities associated to the operation of the distribution system cannot be invoiced to customers: “Compared to the previous entries, in consideration of provisions of art. 179, paragraphs (1) and (2), letter j) of the Electricity and Natural Gas Law no. 123/2012, until the determination by ANRE of tariffs for activities related to system operation, taxes that exceed the laws cannot be invoiced to customers”. Operators being aware that ANRE was partially to blame and that it wouldn’t intervene, except in the situation when someone complained (which is extremely rare), failed to align and go on after the Romanian principle “if it works, ok, if not, not”. But when a consumer happens to know the law and complains at the operator, it negotiates the tariff charged. If the consumer goes to ANRE, for such situations, ANRE forced the operator to pay back the money in full to consumers. 2 years have passed since the warning letter of ANRE and other 10 years from the apparition of the Gas Law (the first one) and we are in the same situation: operators collect money illegally from consumers, and the authority pretends it does not see it. It is outrageous that in the past 3 years, whenever a consumer astounded by tariffs charged notified ANRE, ANRE urged the distribution operator to repay the entire amount of money charged from the consumer. However, ANRE hasn’t done anything to stop this illegal practice. ANRE forced the distribution operators to repay the tariffs for associated activities charged from consumers only if they filed complaints, while the others paid.

We will further present tariffs charged by a distribution operator for consumers, according to its website, in violation of the law and ANRE’s warning:

• Tariff for allowing access to the distribution system for House Tenants’ & Flat Owners’ Associations
• Tariff for allowing access to the distribution system for natural persons
• Tariff for allowing access to the distribution system for legal persons
• Tariff for technical assistance in various urban public works in the area of gas pipelines in operation
• Tariff for mounting-demounting of cooking machines at customer’s request
• Tariff for turning on/off gas at customer’s request or for failure to pay the gas bill
• Tariff for turning on/off gas at the request of the authorized economic operator
• Tariff for commissioning use installations up to 30cu m/h (inclusively)
• Tariff for commissioning use installations of over 30cu m/h
• Tariff for the revision of installations: – two burners
• Tariff for the revision of installations: – three burners
• Tariff for the revision of installations: – one burner
• Tariff for the revision of installations:>=4 burners
• Tariff for sealing/unsealing a device at customer’s request
• Tariff for the verification of installations: >=4 burners
• Tariff for the verification of installations: – two burners
• Tariff for the verification of installations: – three burners
• Tariff for the verification of installations: – one burner
• Tariff for technical endorsement of a pipeline execution project <=400m
• Tariff for technical endorsement of a pipeline execution project >400m
• Tariff for technical endorsement of a pipeline execution project for a regulating and metering station of over 3000 cu m/h
• Tariff for technical endorsement of a pipeline execution project for a regulating and metering station of less than 3000 cu m/h
• Tariff for issuing route approvals of principle and site approvals for documentation containing several plans
• Tariff for issuing route approvals of principle and site approvals for documentation containing one plan

In the end, I will tell you a story in which I was personally involved. A consumer executed a connection to the distribution system in a locality, building at its own expense an interior installation. The value of this work was around RON 16,000. At the end of the work, it requested the distribution operator to commission the installation, but received the answer that it can only be done after paying the commissioning tariff, amounting to RON 27,000. Thwarted, he sought expert advice. When I informed the distribution operator on law provisions, he proposed a negotiation, leading to the phrase: “Ok. Pay as much as you want!”. There are no two ways about it. The Fair Gas Prices (PretCorectLaGaze) campaign aims at presenting other “happenings”; we expect you to share your experiences on:

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