Higher prices and less energy, starting with January 1st

     "Hidroelectrica" is in the final stage of the negotiations to raise the delivery prices by 20%-25% for the companies with which it concluded contracts for the sale of electricity, Dragoş Zachia, the general manager of the company says. He said yesterday, in a press conference, that the increases will only be applied to electricity providers with which they have agreed that the raised prices, which will reach an average of 160 lei/MWh, will be applied retroactively, starting with January 1st, 2012. Also, "Hidroelectrica" is negotiating with these companies the reduction of the volumes of energy by 10%-20%. After reducing the amounts of energy available to the providers which "Hidroelectrica" has direct contracts with, any remaining energy will be traded on the energy exchange. The representatives of "Hidroelectrica" have also requested the reduction of the duration of the contracts, but their negotiation partners have refused this right from the start.
     "Hidroelectrica" began concluding direct contracts to provide energy around 2000, and half of those agreements have been extended until 2018. In 2010, the average prices of the bilateral contracts stood at about 130 lei MWh.
     Some of the companies which have contracts to buy electricity directly from "Hidroelectrica" include aluminum maker "Alro" Slatina, the largest consumer of electricity in Romania, "Energy Holding", "Alpiq RomEnergie", "Alpiq Romindustries" (formerly "Buzzman Industries").
     At the end of last year, Hidroelectrica cancelled the direct contracts for the sale of energy which it had with SNLO, "Salrom" and CLMB Patinoar Braşov, whereas "Luxten Lightning" abandoned the agreement "to protect its image". The issue of the direct contracts for the sale of energy is also being analyzed by the European Commission.
     The head of "Hidroelectrica" estimates that the company's electricity output will not exceed 15 TWh, down compared to the average of the past years, of 17.3 TWh.
     Because of the drought, the company activated the clause of force majeure, which allowed it to reduce the volume of electricity delivered for all the agreements. Mr. Zachia stressed that there is no deadline for the lifting of this clause: "Force majeure will only be lifted when the conditions which caused it disappear, there is no deadline for it. It is possible, if the weather gets warmer and it starts raining, that the flows of the inner rivers will increase meaning the electricity production will increase as well. Right now the rivers are frozen. In the last week alone, the flow decreased 10%".
     Hidroelectrica has a total output capacity of 6400 MW / day, and the available capacity reaches 5500 MW/day. At the moment, however, "Hidroelectrica" generates 1100 MW / day, ensuring 15-20% of the demand.
     The national filling rate of the accumulation lakes is currently 55%, and in the case of the usable volume the filling rate is 35%.