Electricity reform in Romania
Section snippets
Background
Romania is well along in the process of restructuring its electricity industry in compliance with European Union directives (Binig et al., 2000, Oprescu et al., 2002). Over the 1998–2000 period the vertically integrated, state owned monopoly was divided into five separate state owned enterprises: one each for nuclear generation (Nuclearelectrica), hydro generation (Hidroelectrica), thermal generation (Termoelectrica), transmission (Transelectrica), and distribution (Electrica). Since then the
Consumption
The internal final consumption was in 2006 around 41 TWh. The share of non-household consumption in total consumption was around 80%, with industry share in total consumption around 60%. For 2006–2009 the consumption is forecasted to grow at an annual rate of 2.5% (MEC, 2006).
The 2002 Census indicated that 97% of Romanian households are connected to the electricity network, 99% in the urban areas and 95% in the rural areas. There are regional differences in the network coverage. Moldova is the
Electricity reform in Romania
The reform of the electricity sector of Romania has been fuelled by the accession negotiations with the European Commission on the Energy Chapter, which started in March 2002 and was closed in 2004. Negotiations have been focused on the build up of emergency oil stocks, nuclear safety and internal energy market; therefore, Romania's obligation to implement the acquis communautaire required adequate legislation as well as functioning markets and institutions. From the very beginning, Romania
Market power and market failure issues in generation
One of the most important rationales for “vertical separation” of the electricity industry – in the European Union generally and in Romania in particular – is to increase efficiency by creating a competitive generation sector. However, as the experience worldwide has made clear by now, creating competition in electricity generation is not an easy task. Some of the same characteristics of electricity markets that make them fundamentally different from other markets – especially the
Political issues
In 2006 the European Commission noticed with respect to Romanian energy sector:
“the [Romanian] government resumed its practice of large debt cancellations by deciding to erase debts of more than 1% of GDP of a main energy supplier without presenting convincing restructuring measures. Unpaid bills remain endemic in the energy sector. In order to create a level playing field for business, financial discipline should be strengthened.” (EC, 2006)
As shown earlier (Section 2.3), one of the generators
Conclusions
As a general conclusion, Romania has made significant progress in the implementation of the acquis communautaire, being ahead of several older member states in certain areas of electricity sector reform. However, competition is still weak, mainly in the generation sector. There is a certain degree of competition in supply and trading of electricity, but substantial scandals of corruption and bribery have constantly accompanied the liberalization process.
During the last years, several strategies
Acknowledgements
We thank an anonymous referee for very helpful comments, and James Kiawu for excellent research assistance. The views expressed are not those of the U.S. Department of Justice.
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