At the requests of several journalists, we publish below ACUE Federation position regarding the impact of the newly adopted regulation for the connection to the gas network, published today in the Official Gazette.
The adoption of the new regulation on the connection to the natural gas distribution system for both non-domestic and households will create a number of important problems for distribution operators that need to be clarified and resolved in order to ensure the smooth running of the process and the desired finality is reached:
1) It is very likely that gas distribution operators will face a very large number of requests from companies and households in the next period, which is likely to generate delays for the entire connection process. At this time, distributors do not have the technical capacity to manage an exponential increase in connection requests, requiring a period of alignment with the new legal requirements.
2) The capacity of authorized companies by ANRE that can execute connection works in the natural gas sector is limited, on the one hand by the insufficiency of qualified and authorized labor force and by technical capacity, and on the other hand by the lack of expertise necessary to carry out works with high degree of complexity. It is important to note that all gas works must comply with a number of quality standards to ensure the safety of citizens, to carry out the activities of economic agents and to eliminate the potential risk of incidents / accidents that may affect the lives or property of persons.
3) The capacity of other utility owners and other bodies authorized to issue urbanism certificates, permits and agreements / authorizations as well as building permits are limited, the distribution operators not having control over the release deadlines, which we estimate will generate risks in connection with respecting the terms imposed by the Regulation.
4) The Law no. 155/2020, in application of which ANRE drafted this regulation, eliminated, contrary to the provisions of European directives, the principle of economic efficiency (financial return of investments) for the expansion of natural gas distribution networks. Thus, this Law stipulates that the recovery of the costs regarding the connection of the applicants (potential domestic / non-domestic customers) is achieved through the distribution tariffs, according to the ANRE regulations. We stress that no impact study was carried out before these legislative changes were introduced, which will have significant effects, both for gas consumers who will feel the impact in bills and for distribution operators, which cannot finance these investment budgets in addition to those provided for the safe operation of the network.
5) Connecting future customers to the gas network involves other costs related to the design and execution of the indoor gas installation and the purchase of the gas heating boiler so that the respective consumers can effectively use the network. And these costs for the construction of the indoor installation and the purchase of the boiler are borne by the consumer and are not negligible (approximately 3000 euros). That is why the cost-benefit analysis is essential in order not to make inefficient investments in extending the network paid by all consumers through the distribution tariff
6) In this context, an exponential increase in the number of resolved connection requests will lead to an increase in investments to be recognized in the distribution tariff and, consequently, the effect will be found in increasing the value of invoices paid by current customers connected to the system.
7) Thus, by the effect of the Law, a discrimination is created between the new connected customers and those who have already been connected to the network and have paid the connection tariffs established by ANRE, as well as, where it was the case, the value of the objectives necessary for network connection.
8) The legislative amendments do not specify the period of recovery of these investments, so that distribution operators can maintain tariffs at a level bearable for consumers and not have financial difficulties that can easily escalate to insolvency/bankruptcy. In this context, it is important to remember that there are 36 small natural gas distribution and supply operators that do not have the financial capacity to support these investments.
9) We estimate that this exponential increase in connection requests will create a major imbalance in the investment plans of all natural gas distribution operators. We specify that the current distribution systems also require investments to carry out modernization and rehabilitation works necessary for safe and efficient operation, and the pace of these investments is closely correlated with the level of affordability of invoices sent to existing customers.
All these aspects listed above, generated by the impact of future investments, are all the more worrying because, although the gas market has been fully liberalized since 1 July 2020, vulnerable energy consumers and an efficient scheme to support them for the payment of utility bills have not yet been identified.
In addition, it should also be taken into consideration the fact that all connection requests which have been submitted during this year and are in progress must be completed in the next period in accordance with the regulations applicable on the date the connection contracts were concluded, aspect that puts an additional pressure on the activity of natural gas distributors.
The development of gas distribution systems in Romania and the connection of as many consumers as possible is a desire shared by distribution operators, members of the ACUE Federation, and this is still happening today, with tens of thousands of new consumers connected each year. In order for this process to take place without syncope and without putting enormous pressure on those directly involved, it is necessary to take into account absolutely all aspects, starting from the real capacity of the operators to carry out all specific operations on time and reaching the implications on the final consumer.