Exclusive: Why did Romania supply electricity to Hungary at losses of 10-15 Euros/MW?

Last month, a big state-owned company of Romania was involved in the export of electricity to Hungary at a price way below the domestic market level, and probably very profitable for the neighboring country. A buyer showed up on the day-ahead market (PZU) of OPCOM (the electricity and gas market operator), purchasing between 800 and 1000 MW on a certain hourly interval, then re-selling it over the border. It wasn’t a coincidence that the PZU price at end-October reached a 230 lei/MWh peak, up from an average around 140 lei/MWh. Interestingly, since yesterday, trading was suspended and the price on the spot market returned to the 140 lei/MWh average.

It might be a coincidence that these exchanges occurred after Hungarian PM Viktor Orban’s visit to Romania, during which he was also unofficially received by President Traian Basescu. Apparently it happened when the nuclear power plant near Pecs, in Hungary, experienced some problems; Romania might have covered the deficit of electricity.

OK, we might say we extended a friendly hand to our neighbors on west. But why was it such a secret, why was it breaching the Law No. 123 on energy, and why was it against the regulations of the National Energy Regulatory Authority? Moreover, how could Romania afford exporting electricity at a loss of 10-15 euros for each megawatt it supplied? Who’s responsible for the consequences? Or what is the actual understanding nobody spoke of? And, the maximum irony, while we’re supplying aids abroad and we’re paying high prices for electricity, Hungarians have cheaper energy than Romanians.

What might be the Romanian state-owned company involved? Take a guess – we’re providing some clues and arguments inevitably pointing to the exporter. The question still stands: how is it possible to buy electricity on the Romanian market at a price way up the previous averages and then export it at a loss of 10-15 euros for each and every last megawatt?

Well, it’s possible here. We must mentioned that the electricity purchased on the Romanian day-ahead market did not reach the free market of Hungary, namely their HUPX exchange; instead, it was injected directly in their grid. This leads us to the conclusion it might be an aid. If so, why wasn’t it open? Moreover, if only a handful of officials knew about it, how can we, the Romanian consumers, know when – if ever – and how much of the cost will be recovered?

Well, things might be visible from other places, too, this time, especially as it’s not Romania’s (i.e., the state-owned company’s) first experience of this kind. Similar actions, known firstly to the National Power Dispatcher (DEN), have been already carried out. Here’s a single example. At one point, important amounts of electricity went to export under so-called collaboration and synchronization contracts between the the National Energy Systems of Romania and Bulgaria.

The energy for synchronization, however, ended as far as Greece and Italy, through Turkey. It’s true we don’t know the prices; it’s certain someone reaped benefits. We thus anticipate the National Anticorruption Directorate will have a tough job checking those deals. The handiest starting point is the recent understanding with Hungary.

To give a concrete view of things, we will continue by publishing the average price on the day-ahead market over the first ten months of this year and the way it reached 230 lei/MWh at the end of last week, then plummeted yesterday, when the aid ceased, to 140 lei/MWh.