According to analysts at brokerage house Goldring, the revenue development of Nuclearelectrica and OMV Petrom could be negatively affected by about 5% in the financial year from which the new prices under the new energy regulation apply.

This is compared to the budgets and estimates for this year and a higher percentage when taking into account the average prices received for the sale of energy in 2022.

We will remind you that the Government recently decided to return to the regulation of the electricity market. Thus, until March 2025, energy producers will be obliged to sell electricity at a price of 450 lei/MWh through the centralized procurement mechanism.

They also say that although the capital market, as a rule, sensitively perceived such legislative changes, it has not yet reacted to the Government’s decision.

“This may lead us to believe that investors are not yet convinced that this mechanism will eventually be approved, or at least not in this form,” Goldring analysts added.

“Given the way electricity prices are shaped in Romania (generation, transmission, distribution and supply), the decision to return to a centralized procurement mechanism will mainly affect electricity producers whose production costs are higher and should be identified among those have coal and gas plants. For example, a plant in Paroshen, which produces energy at a price significantly higher than the price limit set by the Decree, may be one of the most affected producers. On the other hand, producers such as Hidroelectrica, Nuclearelectrica or OMV Petrom will be affected very little,” say analysts at a brokerage house in Tirgu Mures.

Goldring analysts expect the profits of producers whose costs are below 450 lei/MWh to fall. They also say that Nuclearelectrica will be the least affected of the BVB-listed companies. The two operating reactors produce between 1,380 MWh and 1,400 MWh daily.

According to the cited source, negotiations are currently underway regarding product prices at OPCOM and the Romanian Commodity Exchange.

As in most EU countries, the market operates on a cap-price model, meaning that the cheapest energy enters the system first, and more expensive sources are added based on demand. The model is efficient, transparent and benefits producers who have the lowest possible costs. The price is set by the last manufacturer that found an analogue, that is, the price is given by the most expensive manufacturer.

Currently, at the end of the first nine months of the current year, Nuclearelectrica has an average selling price of electricity of 626.3 lei/MWh, the amount sold is 7.7 million MWh since the beginning of the year.

Hidroelectrica, a company that should be listed on the stock exchange and has a significant weight in the portfolio of another listed entity, Fondul Proprietatea, had an average selling price of electricity of 577.7 lei/MWh, the total energy sold was 7 . 5 TWh at the end of the first semester.

OMV Petrom has a lower share of revenue from the sale of electricity, but despite this had a net electricity generation of 3.53 TWh in the first nine months of the year, the average OPCOM spot price of electricity delivered in the range is 1,368 lei/MW – hours

Goldring analysts remind that the BET-NG index, which reflects the evolution of energy and utility companies, did not remain indifferent during the entry into force of the Decrees, which focus on the energy sector.

“This marked an increase of 1.10% with the adoption of Decree No. 27 of March 18, 2022, which provides for limiting the final price of electricity for household consumers, respectively, a decrease of 2.37% after the adoption of Decree No. 119 of September 1, 2022, which provided limiting and compensating energy prices,” the message reads.