Who is to win following gas market liberalisation for non-household clients?
- Written by Dumitru Chisalita, Judicial Technical Expert in Oil & Gas
The way transition takes place from the regulated market to a free market for non-household consumers is marked by the dominant position of the suppliers (which have sold gas on regulated prices to non-household consumers until December 31, 2014) against the non-household clients.
The Law on Electric Power and Natural Gas no. 123/2012 set, two and a half years ago, the date of January 1, 2015 as the threshold for moving from the regulated market for non-household consumers to the free market for the natural gas.
Two and a half years ago the ‘Master Plan’ was agreed upon for the gradual transition from the regulated market to a free market, which included two directions:
- The gas deregulating schedule meant to provide a gradual increase of the price, starting from the regulated price on the market. This schedule was put into force by the Romanian government by several government decisions.
- The dissemination and informing plan for the clients, in order to get them prepared for January 1, 2015, which included obligations for the gas market regulator (ANRE) during 2012 - 2014, that haven’t been met. The natural gas market liberalisation started two and a half years ago, having clients’ preparedness on January 1, 2015 as main component of the ‘Master Plan’; this paving of the way hasn’t been carried out.
On November 6, 2014 (less than 30 working days until the deadline for the coming into force of the free market for non-household consumers) ANRE imposed the suppliers that were delivering gas on the regulated market to non-household clients the condition to inform the customers they are compelled to join the free market on December 31, 2014 at the latest, or to accept a six-month extension of the contract with the supplier for a price suggested (imposed) by the supplier.
Naturally, in order to prevent losing the clients, the suppliers carried out a ‘formal’, incomplete and scarce informing of the clients, letting them understand an extension of the contract would be the most advantageous choice.
Delivering incomplete information, the short interval for negotiations between the suppliers and the non-household clients, as well as the lack of mediation for the disagreements between the former regulated non-household consumers and the gas suppliers – have all been premeditated instruments that offered a dominant position to the suppliers on January 1, 2015.
After ‘convincing’ the clients about the liberalisation process, the suppliers have submitted disadvantageous gas offers for their non-household clients in December 2014, counting on the following:
a) Even if aware and able, the clients would not have enough time to negotiate due to the days off during December 2014;
b) According to the Law on Gas if contracts were not concluded by December 31, 2014, a double illegality was registered – gas supply without contract on behalf of the supplier and fraudulent consumption without contract on behalf of the client, the suppliers being thus compelled to cease gas deliveries.
c) According to the Law on Gas, ANRE cannot interfere in mediating (pre-commercial) problems between the gas suppliers and the non-household clients forced to become eligible by January 1, 2015, although the divergences between suppliers and clients have come up due to:
- The compulsory transition from the regulated market to the free market;
- The process unfolded during winter holidays, thus a period lacking economic activity;
- The information delivered and the offers for the gas volumes for 2015 were sent less than 30 working days before December 31, 2014, the deadline for contracts to expire;
- The transition process took place during winter and any supply limitation would have led to potential losses;
- not applying the information dissemination programme regarding the transition from the regulated market to a free market (according to the memorandum for deregulating regulated prices and applying the Master Plan’ to inform consumers, an obligation that wasn’t met);
- The setting up of a semi-regulated period of six months imposed by ANRE (January 1 – June 30, 2015) to provide graduated transition from the regulated market to a deregulated one in order to protect the non-household clients and assure the continuity for gas supply.
As a consequence, the clients have only one option, to accept the offers submitted by the suppliers, or else face the risk of being disconnected from the natural gas network during winter.
Thus, natural gas liberalisation for non-household clients has been transformed from an opportunity for the clients into an opportunity for the suppliers. www.dumitruchisalita.ro