By means of recent changes to the Energy and Gas Law no. 123/2012 (the “Energy Law”), the operators holding concession over the electricity distribution grid (the “Distribution Operators”) have been compelled to take over the ownership over private electricity distribution grids and related energetic capacities (the “Energetic Capacities”) in specific cases set out thereby. In addition, the amendments to the Regulation for the connection of users to the public interest electricity grids (the ”Connection Regulation”) which will enter into force in January 1, 2021 changed the ownership regime over the Energetic Capacities built for connecting new users (such as power producers), by recognizing the ownership right of such users and their right to sell the capacities to the Distribution Operators.

In order to create the secondary legal framework necessary for implementing the above principles, the Romanian Energy Regulatory Authority (“ANRE”) recently issued Order no. 205 of October 28, 2020 approving the Methodology regulating the conditions for taking over the ownership over the electricity distribution capacities, published in the Official Gazette no. 1037 of November 6, 2020 (the “Methodology”).

The Methodology regulates two scenarios in which the Distribution Operators are bound to purchase the Energetic Capacities, as follows:

Irrespective of the scenario, the transfer procedure is commenced upon the seller’s initiative, by submitting a sale offer to the Distribution Operator. As to the latter’s flexibility to oppose to the purchase once a sale offer is received, while in the first scenario no such flexibility exists, in Scenario 2 the Distribution Operator is compelled to accept the purchase only to the extent the Energetic Capacities are necessary for ensuring the continuity of the distribution service and no alternative more cost-efficient solutions for developing the grid in that area have been identified.

In brief, the sale procedure consists in the following main stages:

Along with the sale offer, the seller must submit to the Distribution Operator specific documentation and information regarding the capacities offered for sale, such as:

The sale price is established by means of negotiations conducted between the parties, with the observance of specific limits set out by the Methodology.

Thus, in Scenario 1, the price may not exceed the net book value of the assets (according to the seller’s accountancy records) or the value certified by an independent authorized expert (if the seller is not bound by the obligation to keep accounting for its fixed assets). In case of Scenario 2, the price is established based on the justified value of the Energetic Capacities certified by an independent authorized expert, without exceeding the net book value of the assets (according to the seller’s accountancy records).

As to the timing for performing the sale, whereas no specific deadline is provided for Scenario 1, in case of the second scenario, the Distribution Operator has the obligation to perform the purchase within 120 days from being informed on the certified value of the assets.

In close relation to the Methodology, ANRE has launched for public debate an additional draft of order for supplementing the Procedure regarding the substantiation and the criteria for approving the investment plans of the transmission and system operator and of the electricity distribution operators, approved by the Order of the ANRE President no. 204/2019.

The draft sets out additional requirements to be observed by the Distribution Operators for ensuring that the costs incurred for purchasing the Energetic Capacities are recognized by ANRE:

*****

This article contains general information and should not be considered as legal advice.

Mihaela Nyerges

Managing Associate

mihaela.nyerges@mprpartners