Moldovan electricity distribution company demands increase of electricity rates by 50 per cent

Chisinau, 19 March /MOLDPRES/ - The Gas Natural Fenosa company demands an increase of the electricity rate by an average of 50 per cent, up to 2.30 lei per kilowatt/hour, said representatives of the National Energy Regulatory Agency (ANRE) during public consultations launched today.

The current rate of 1.52 lei was established in May 2012. Representatives of Union Fenosa explain the request to revise the rate by the Moldovan leu’s depreciation against the dollar, increased maintenance and development costs, investments worth about 850 million lei and other factors.

This is not the first demand to increase tariffs. Two requests were submitted in 2013, another two in 2014, and, and in 2015, marked by a strong fluctuation of the official exchange rate, representatives of the company submitted four applications for the adjustment of rates.

"The company is put in a position of not being able to pay energy purchases, the debts amount to 1.472 billion lei, which we covered from our own sources and loans," said Gas Natural Fenosa President Silvia Radu at the meeting. She added that monthly losses amounted to 80 million lei, much of which was formed because of the devaluation of the national currency against the dollar.

"Starting from 1 April, we will face a situation of not covering the needs of the energy sector," said Silvia Radu.

An exchange rate of 11.83 lei for 1 dollar was taken into account in setting electricity tariffs in May 2012. The official quota announced by the National Bank is currently 18.3 lei per dollar and exceeds the exchange rate considered during pricing by more than 50 per cent.

The tariff for the population, as requested by the company, is of 2.58 lei per kilowatt/hour, compared to the current 1.58 lei, said Sergiu Codreanu, specialist at the Planning, Income and Regulations Department of RED (Power Distribution Networks) Union Fenosa. "Energy procurement prices have risen sharply as a result of currency depreciation," said Codreanu, adding that 86 per cent of electricity currently was purchased from the Kuchurgan power station in foreign currency.

The electric energy purchasing price, calculated in dollars, has remained at the same level in the past four years, with a slight difference, but in Moldovan lei it increased from 0.79 lei for a kilowatt / hour to 1.28 lei or by 61 per cent.

Association of Energy Consumers President Nicolae Mogoreanu accused Gas Natural Fenosa representatives of the fact that although it announced major investments, expanding networks moved slowly and the quality of services was far from ideal. Mogoreanu invoked frequent power outages.

More participants in the public consultations stated that after the tariff increase, a part of the population would be unable to pay their bills.

Public consultations will continue in the coming days, after which ANRE will publicly express its position on the request of Union Fenosa, said representatives of the regulatory authority.

ANRE has previously described the charges proposed by operators as "unjustified". The regulator noted that it "will examine in detail the calculations" underlying the new tariffs, "to avoid abuse, ensure maximum efficiency at minimum costs and protect the interests of end consumers."

(Reporter V. Bercu, Editor A. Raileanu)