Legally, the price of gas from domestic production grows, and technically – the price of gas for population should decrease

by Dumitru Chisalita

Gas market liberalization, by determining actions that should be taken on 1 July 2016, has become the subject of amateurish conversations. The actors who have given their opinion on the subject forget an essential element in this discussion – the legality of the decision to be made. According to Art. 179, par. 2 letter b of the Gas Law: “Activities related to the regulated market include gas supply at a regulated price under framework agreements until 30 June 2021 for household customers”. The legislator considered it important that it established the exact date when to eliminate the regulated market in Romania. I believe it is not necessarily a practice that such an action be determined by law, this responsibility being much more useful to be left at the level of secondary legislation, given the dynamic nature of such decision. But, since the exact date when the regulated market should disappear is established by law, i.e. on 30 June 2021, only the legislator can determine otherwise in an amendment to the existing law. Thus, neither ANRE nor the Ministry of Energy nor the Government have this option. This option belongs to the Parliament of Romania. It is true that there is a possibility of Government Emergency Ordinance, but which requires validation from the Parliament. It is true that there is a possibility for the Government to have an initiative to amend the law, but it did not have it. The same article 179, establishes in paragraph 7 that ANRE shall monitor annually the results of the schedule for the gradual elimination of regulated prices for end-customers and shall propose the Government, as the case may be, to capitalize on domestic gas production in the domestic market until the completion of the schedule approved. Thus, under the law, ANRE had to permanently monitor the results of the schedule for gradual elimination of regulated prices and, if it found possible negative effects of eliminating regulated prices, so that they are less felt by customers (according to art. 179 par. 3), it had to make a proposal once a year to the Government to change the schedule for gradual elimination of regulated prices for end-customers, which was agreed by the Government of Romania with the IMF, WB and EC, starting with 1 July 2013, for household customers. I learned through statements made in the press that ANRE hasn’t monitored the situation, has not conducted a study on the gradual elimination of prices and has not submitted to the Government a proposal to change the schedule for the elimination of regulated prices. In this situation, on 13 June 2016, we don’t have a Government Decision on a new schedule. Thus, in accordance with the Gas Law (if we want to comply with it), elimination of regulated market will take place on 30 June 2021, and the only schedule for the gradual elimination of regulated prices is the existing schedule (acquisition of gas from domestic production at a price of RON 66/MWh on 1 July 2016, RON 72/MWh on 1 July 2017 and RON 78/MWh on 1 July 2018). As it can be seen, the Ministry of Energy cannot in any circumstance be nominated by the legislator with any task in these stages. The statements according to which a letter has been sent to the Ministry, that the Ministry is not willing, that the Ministry is against etc. are only … stories. The law has no provision on the involvement of the Ministry of Energy and it shouldn’t be allowed to get involved, given the status as representative of the majority/minority shareholder, as the case may be, in several gas companies, which would be advantaged/disadvantaged by such a decision. Even if the Ministry of Energy is not involved in determining the Schedule for the elimination of regulated gas prices, the Gas Law provides however that the competent ministry should be initiator of the Government Decision, which establishes, in paragraph 5 of art. 181, the acquisition price of gas from domestic production for household customers (“The acquisition price of gas from domestic production for household customers and thermal energy producers, only for the amount of natural gas used to produce heat in cogeneration plants and thermal power stations meant for household consumption is determined by Government Decision, at the proposal of the competent ministry, in line with the provisions of the Schedule for gradual elimination of regulated prices for end-customers”). The competent ministry is assimilated to the Ministry of Energy, which determines however, from my point of view, in an erroneous manner, that it be the one to initiate the Government Decision on the acquisition price of gas from domestic production for household customers. I believe that this capacity is wrong, due to the role of the Ministry of Energy, in its double quality of representative of the shareholder in some companies and initiator of prices to be used by these companies in the market. However, the Ministry of Energy plays a role rather formal, according to the law, as the price proposal made has to be “in line with the provisions of the Schedule for gradual elimination of regulated prices for end-customers”, respectively the price submitted is the price established by the Government at ANRE proposal. Compliance with the law should not be discussed, but a debate on pros and cons of changing the Schedule (until its elimination), respectively the fact that keeping the Schedule for gradual elimination of regulated prices for end-customers (if it was a fair approach), should not influence the price to population, is another discussion or the real discussion, avoided by the responsible institutions. In my opinion, both tariffs for services and deferred costs should be significantly reduced, which would determine the need to decrease the price for population, even in conditions of increasing the price provided by the Schedule.

Source: www.dumitruchisalita.ro.

Read the article in Romanian here.

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