Romania Electricity Tariff Experience - Narucpartnerships.org

Workshop on regulatory issuesROMANIAELECTRICITY TARIFF EXPERIENCEFlorin GUGUANRE Romania1-3 March, 2004, BAKU, AZERBAIJAN

ROMANIA ELECTRICITY TARIFF EXPERIENCESITUATION BEFORE 1999‣ Low level of electricity tariffs;‣ All types of cross subsidies:‣ Electricity ^ Heat;‣ Industrial ^ Residential;‣ High Voltage ^ Low Voltage;‣ Tariffs structure not reflecting the costs induced inthe system‣ Lack regulatory authority.Florin GUGU, ANRE RomaniaMarch 1-3, 2004, BAKU Page 2

ROMANIA ELECTRICITY TARIFF EXPERIENCESITUATION AFTER 1999All mentioned problems were solved:‣ Regulatory authority was established;‣ Price levels were rise to cover costs;‣ Cost allocation methodology for cogen units;‣ Cross subsidies between Industrial and Residentialwas removed;‣ The LV tariffs were increased significantly;‣ Tariffs system was differentiated on time zones andload factors.Florin GUGU, ANRE RomaniaMarch 1-3, 2004, BAKU Page 3

ROMANIA ELECTRICITY TARIFF EXPERIENCEINNOVATIVE TARIFFS FOR RESIDENTIALIssues to be addressed:‣ The need for a SOCIAL TARIFF;‣ Who should qualify for SOCIAL TARIFF?‣ Avoid birocracy;‣ Encourage electricity consumptionFlorin GUGU, ANRE RomaniaMarch 1-3, 2004, BAKU Page 5

ROMANIA ELECTRICITY TARIFF EXPERIENCEANREELECTRICITY MONTHLY BILL FOR RESIDENTIAL CUSTOMERS- SEPTEMBER 2003 -10987Social tariffStandard tariffV[USD/month]65432100 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 8543.282.3E[kWh/month]Florin GUGU, ANRE RomaniaMarch 1-3, 2004, BAKU Page 6

ROMANIA ELECTRICITY TARIFF EXPERIENCEANREVARIATION OF THE ELECTRICITY AVERAGE PRICE FOR RESIDENTIALCUSTOMERS - SEPTEMBER 2003p[USD cents/kWh]20191817161514131211109876543210Social tariffStandard tariff0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150E[kWh/month]Florin GUGU, ANRE RomaniaMarch 1-3, 2004, BAKU Page 7

ROMANIA ELECTRICITY TARIFF EXPERIENCEREQUESTS FOR A FLAT RATE‣ Lack of tariff culture;‣ Consumers should learn by themselves theeffects of each tariff;‣ Most of the residential consumers prefercertainty although it costs more.Florin GUGU, ANRE RomaniaMarch 1-3, 2004, BAKU Page 8

ROMANIA ELECTRICITY TARIFF EXPERIENCEANREELECTRICITY MONTHLY BILL FOR RESIDENTIAL CUSTOMERS- SEPTEMBER 2003 -109V[USD/month]87654Social tariffStandard tariffMonomial tariff (withoutsubscription)32100 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 8543.282.3E[kWh/month]Florin GUGU, ANRE RomaniaMarch 1-3, 2004, BAKU Page 9

ROMANIA ELECTRICITY TARIFF EXPERIENCEANREVARIATION OF THE ELECTRICITY AVERAGE PRICE FOR RESIDENTIALCUSTOMERS - SEPTEMBER 2003p[USD cents/kWh]201918171615141312111098765432100 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150E[kWh/month]Social tariffStandard tariffMonomial tariff (withoutsubscription)Florin GUGU, ANRE RomaniaMarch 1-3, 2004, BAKU Page 10

CONCLUSIONS‣ Utility sector and its regulatory institutionsare not ideally suited to address thisdifficult problem;‣ Regulatory involvement should be graduallyreduced over time;‣ Innovative tariffs represent a key solution;Florin GUGU, ANRE RomaniaMarch 1-3, 2004, BAKU Page 11

THANK YOUFOR YOUR ATTENTION!Florin GUGU, ANRE RomaniaMarch 1-3, 2004, BAKU Page 12