Share This Post
It took more than 4 years for the Competition Council to examine a complaint submitted by a company against the National Energy Regulation Agency (ANRE) and the major electricity distribution company RED Union Fenosa.
In September 2014 “TehGaz Grup” SRL launched a complaint against ANRE and RED Union Fenosa claiming the violation of art 12 of the Law on Competition (“actions by a public authority aiming at restricting, impeding or distorting competition”).
The circumstances related to the claim:
The claimant wanted to sign an agreement for the supply of electrical energy with the Transnistrian company “Dnestrenergo” (at a price lower than the one proposed by RED Union Fenosa) and applied to RED Union Fenosa for an agreement for the distribution of electrical energy through its network.
However, it was denied such contract due to the reason that ANRE had not approved the relevant tariffs without which, as RED Union Fenosa claimed, according to the law it was not possible to sign an agreement for the delivery of the electricity energy.
At the time of the application by TehGaz SRL, the tariffs were still debated by the working group within ANRE that was developing them on the basis of a methodology that was approved in the end of 2012 and became effective on 01 March 2013. As a result of that work, the preliminary tariff for the distribution of electrical energy was only approved on 31 Jan. 2015. Earlier, on 01 Jan. 2015 the activities of the RED Union Fenosa were divided between the supply of electrical energy to final consumers (this activity was transferred to the newly created Gas Natural Fenosa Furnizare Energie SRL) and the distribution of electrical energy. The preliminary tariff could only be used for the delivery of electricity produced by Gas Natural Fenosa until the definite tariffs were approved, as it did not include the actual costs incurred by the distribution network.
The respective tariff was approved on 18 July 2015, but then shortly it was suspended, until in the end the new tariff was finally approved in March 2016 and became effective on 01 Apr. 2016.
Investigation of the Competition Council
The Competition Council launched its investigation in autumn 2014, and so it was conducted during the process of developing the new tariffs. In July 2017 the Council presented its preliminary findings to the parties and it found a violation of art. 12 of the Law on Competition in the actions of the ANRE.
However, later it changed its opinion and admitted there was no violation by the national energy agency.
The Council also found that the licence of the Transnistrian company had expired on 31 Dec. 2013, thus, it could not operate in the Moldovan market (and sign the respective agreements for the supply of electrical energy).
In 2017 ANRE informed the Competition Council that the claimant would not have been able to purchase electrical energy at a lower price even if the tariff had been approved earlier, because the one adopted in July 2017 was 37 % higher than the tariff enjoyed by the claimant before that time. Moreover, the price included in the claimant’s contract with Dnestrenergo did not include the energy transportation costs outside Dnestrenergo’s network (and nor did it include other related costs).
The Competition Council also stated that no other company operating in the same market with the claimant could purchase energy from another supplier. Moreover, from the moment the new tariff was approved, no company, including the claimant, has changed its energy supplier.
In 2014 the claimant lodged a claim with the court arguing that the national energy agency illegally avoided approving the tariffs. However, that claim was dismissed as the courts considered they could not oblige the national agency to adopt the tariffs.
The Competition Council stated that the agency managed to demonstrate that during the period of 2013-2015 it took necessary steps to approve the tariffs (establishing a working group, carrying out the relevant analysis and holding consultations, etc.). As the basic costs included in the tariff are determined by the service provider (RED Union Fenosa), ANRE could not be held liable for not approving the tariff earlier.
Art. 12 of the Law on Competition provides that any action or inaction by central or local public authority or institution that restrict, impede or distort competition is forbidden. The Competition Council in the end found no violation of that article. It stated that in the absence of the tariff for distribution of electrical energy, all companies in the market were in the same conditions, thus no discriminatory approach could be observed.
Overall, the decision of the Competition Council sounds rather logical. However, certain questions still remain:
– Why did it take so long for the Council to examine the complaint? First of all, the whole process lasted more than 4 years (I wonder if there was any other decision by the Competition Council which took so long to take). And during the investigation the situation with tariffs changed several times inevitably influencing the course of the investigation.
– The Competition Council only stated that all companies that benefited from the same services as the claimant were in equal conditions and there was no discrimination among them. However, the Competition Council only considered the actions of ANRE and RED Union Fenosa in the light of art. 12 of the Law on Competition.
It completely skipped over potential abuse of the dominant position by RED Union Fenosa (that could be assisted by the energy agency) under art. 11 of the Law (prohibition of abusing a dominant position in the market). Were the tariffs approved in the end justified? Was the period for approving the tariffs by ANRE reasonable? Could there be any delay in considering and approving the tariffs imputed to the distribution company?
All these questions were not analysed in the decision of the Council (some of them were barely mentioned, though without any proper and deep analysis). Without answering them the problem of transparency of ANRE’s actions on this issue remains unsolved (particularly as up until now there are allegations of deficiencies in ensuring an effective independence of ANRE from political factors and lack transparency of energy procurement*).
*see the 2018 State of the Country Report by ExpertGroup: