Fair Gas Prices. In absence of ANRE rules, distribution operators make the law

by Dumitru Chisalita, energy expert

We are aware of the natural desire of companies to hold monopoly to secure profits, therefore the regulation of natural monopolies should determine the companies activating in this field to limit their gains. But, when regulations are delayed by YEARS, the monopoly exists. In 2004, with the entry into force of the first gas law in Romania, it was determined that operators can build distribution pipeline systems at their expense, if they prove the feasibility of this action. Law 123/2012 detailed in art. 151 how works for the achievement of objectives/pipelines needed for connection are financed, setting that “the distribution operator or the transmission and system operator cannot deny access to the system and are required to finance the works if the achievement of objectives/pipelines needed for connection is economically justified”. The technical and economic study that should prove the economic justification of building a new system must be conducted according to criteria approved by ANRE. 3 years after setting the legal obligation for distribution operators to develop distribution systems at their expense, they continue to develop (in general) networks at the expense of consumers. It happens because ANRE has not prepared, in this period, criteria for proving the economic justification of building a new system.

Operators make the law: pipelines are profitable only at the expense of consumers

Without this regulation, distribution operators, at customer request to build a new distribution system, to expand a system etc., prepare an economic analysis, with indicators set by the operator’s management, indicators that are chosen as to prove, in general, the unprofitability of the investment. Thus, they force consumers to pay tens/hundreds of thousands of lei to build the distribution networks which they subsequently take over for free (condition required by law to operators0. The economic analysis of the profitability of building new pipelines, conducted by operators, often takes into account the requirement to recover the investment within 1 year, which determines that many investments “be profitable, only at the expense of consumers”. This approach, defying for consumers, is against both the international principles, where the return on investment in gas pipelines is at least 12 years, but also the principles in Romania, where the return on investment in distribution pipelines is considered 30 years. Feasibility studies for building a pipeline are “made” not to be profitable, to force consumers to finance them and give them to the operator for free. Imitating interest for consumers, by preparing an alleged economic analysis (given the conditions imposed) that justifies the construction of distribution pipelines at the expense of distribution operators determined that in the past 10 years (since this method is practiced) operators benefited from thousands of kilometers of pipelines entered into their portfolio, without paying any money. It’s important to mention that these pipelines once built, at the expense of certain consumers, they produce money for distribution operators by the connection of new consumers to these pipelines. Moreover, distribution operators claim amounts of up to 3 times higher than the actual pipeline cost. Even if the law stipulates that the applicant is entitled to recover the equivalent value of the amount invested from the commissioning of the objective/pipeline, from the following users connected to objectives/pipelines built, without another regulation that ANRE failed to issue (3 years from the apparition of the law). Without the ANRE regulation, which would have to set the recovery of the share of the investment made by consumers, they cannot hope that they will ever recover their money invested in a pipeline that serves other neighbors who haven’t paid for it, but pay exactly the same tariff as the consumers that financed the pipeline. The construction/extension of a distribution system, to serve a gas consumer accepting to be paid by it, is sized much above the consumer’s demand. In fact, the pipeline is sized for future real estate developments of the area, but at the expense of the first consumer/consumers. The law requires the consumers who paid for the pipeline construction, after completing the pipeline, to give it for free to the distribution operator.

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