ANNEXES
ANNEX 1
Commission of the European Communities, Brussels, 9.10.2002, SEC(2002)
1409
Chapter 14: Energy
Progress since the last Regular Report
Since the last Regular Report, Romania has made progress in preparing
for the internal energy market, in particular as regards the level of
market opening, pricing policy, and restructuring of some utilities.
However, progress in implementing key structural reforms and improving
administrative capacity has been limited.
Concerning security of supply, an Emergency Ordinance adopted in April
2002 established an oil stock monitoring system in Romania. While the
country has sufficient storage capacity to meet the requirements of the
acquis, Romania does not have the requisite stocks of oil products.
The Ordinance stipulates that the level of these oil stocks will be
gradually increased, and will be 50% financed by the state, through the
National
Agency for State Reserves, and 50% by private operators.
Significant progress has been made in the field of competitiveness and
the internal energy market. In the electricity sector, following a
Government Decision in January 2002, market openness was increased to
33%, with licensed suppliers and eligible customers defined by the
regulatory authority. In practice, the contracts signed between licensed
suppliers and eligible customers amount to around 8% of the market.
Electricity prices were adjusted several times and now reflect
production costs to an acceptable degree. Prices have also been indexed
with the US dollar, which prevents some of the negative effects of
inflation. An Ordinance adopted in March 2002 gave the Prime Minister
responsibility for appointing the President of the National
Electricity Regulatory Authority (ANRE), which reinforces its
independence vis-à-vis the Ministry
of Industry and Resources. In addition, two regional distribution
companies have been prepared for privatisation.
Tests with a view to future interconnection with the Western
European UCTE (Union Co-ordinating the Transport of Electricity) were
finalised and the monitoring of the inter-connected operation with UCTE
is currently being carried out.
In the gas sector, the rate of market opening was increased from 10% to
25%, and the regulatory authority has selected 45 eligible customers. As
with the electricity sector, gas prices have been adjusted to reflect
production costs, they are now indexed with the US dollar, and the
president of the National Gas Regulatory Authority (ANRGN) is
appointed by the Prime Minister.
The Government has adopted an action plan for the improvement of bill
collection in the energy sector, including the disconnection of
non-paying companies. However, problems of non-payment remain acute in
the state sector (state-run industries, local authorities or public
services). Although there are no reliable figures available, the energy
bill collection rates remain at an insufficient level.
In the sectors of oil and solid fuels, no major developments have been
recorded.
As far as energy efficiency and renewable energy is concerned,
little substantial progress was made during the reporting period. In
October 2001, the Romanian Fund for Energy Efficiency was legally
established but it is not yet operational.
In the field of nuclear energy, Romania operates, at the Cernavoda
Nuclear Power Plant, a Canadian-designed CANDU 6 type reactor with a
nominal capacity of 700 MWe. This unit has been licensed following the
Canadian licensing requirements for similar reactors in Canada.
Cernavoda Unit 1 provides 11% of the country.s electricity. Unit 2 of
Cernavoda is being completed and is expected to be operational by 2005 .
2006.
As regards nuclear safety, Romania has continued to develop the
legislative and regulatory framework. However, no progress has been
achieved in dealing with spent fuel and nuclear waste.
Legislation has been harmonised with the adoption of orders for
approving EURATOM safeguards, on radiological safety norms in September
2001, and on international transit of nuclear materials through Romanian
space in February 2002.
As part of the Strategic Plan for Safety Analysis, a technical agreement
was concluded between the National Company Nuclearelectrica and a Korean
nuclear power company in order to assist the Romanian operator to
develop its capability to perform accident analyses at Cernavoda Nuclear
Power Plant. This Strategic Plan is scheduled to be finalised by
2004.
Overall assessment
As regards security of supply, Romania has adopted legislation that
should provide the basis for future compliance with the acquis
on oil stocks. While storage capacities are sufficient, required
oil stocks will have to be built up.
In the electricity sector, important steps have been taken to
adjust electricity prices to reflect production costs and to
establish the legal framework for market opening. Similar positive
reforms have taken place in the gas sector. However, there has been a
continued lack of progress with restructuring the state-owned energy
producer Termoelectrica in order to improve its management and to make
its production costs competitive. The key priority should now be a
thorough reform of Termoelectrica in order to reduce production costs of
thermal power plants.
Poor collection of energy bills remains a fundamental problem in
Romania which impacts negatively on the financial situation of
the utilities and prevents them from making the necessary
investments to modernise their networks and improve their
efficiency. This situation distorts the entire Romanian economy and
Romanian efforts
should be devoted to ensuring a genuine improvement of bill payment. For
the solid fuels sector, it is important that Romania continues with its
restructuring efforts and, for the hard coal sector, ensures
compliance with the Community state aid acquis.
Romania does not devote the necessary resources to improving energy
efficiency and to promoting renewal energy. The present efficiency of
production means and networks is very poor, mainly due to a lack
of investment. The Romanian Agency for Energy Conservation is in charge
of promoting energy efficiency but has very limited financial and human
resources - which is a demonstration of the low priority Romania
gives to energy efficiency. This is particularly worrying, since the
energy intensity of the economy is very high (estimated at around 8
times the EC average).
The European Union has repeatedly emphasised the importance of a high
level of nuclear safety in candidate countries. In June 2001, the
Council of the European Union took note of a Report on Nuclear Safety in
the Context of Enlargement. This report contains recommendations to
all candidate countries to continue their national safety improvement
programmes, including the safe management of spent fuel and
radioactive waste, and
regarding the safety of their research reactors. During the first half
of 2002, a special Peer Review on nuclear safety assessed the
progress made by candidate countries in implementing the 2001 Report.s
recommendations. This exercise under the auspices of the Council
resulted in a Status Report, published in June 2002, which concludes
that
Romania has accepted and addressed all the recommendations contained in
the Report on Nuclear Safety in the Context of Enlargement of June 2001.
Most recommendations have been adequately addressed. Romania should
devote further attention to six recommendations: to systematically
consider and implement relevant safety improvements for similar
plants adopted in Canada; to strengthen the co-operation between the
Nuclear Safety Regulatory Authority (CNCAN) and the Canada Nuclear
Safety Commission; to install an emergency Operating Centre at
Cernavoda; to pay attention to the continued financial resources
of the operator, as well as to the preservation of its
management.s and staff.s competence; and to complete the update and
regulatory reviews regarding fire and seismic hazard assessments at
Cernavoda.
The Status Report recommends further monitoring with regard to four
recommendations: to ensure the implementation of relevant safety
improvements adopted in similar CANDU plants in Canada; to ensure the
timely implementation of the Strategic Plan for Safety Analysis of
Cernavoda Unit 1 and the development of the Safety Analysis Report
for Cernavoda Unit 2; and to ensure that sufficient resources are
allocated to the Nuclear Regulatory Authority in order to strengthen its
capabilities.
Salaries at CNCAN remain low when compared with employees in the nuclear
industry and there is a steady turnover of personnel, who leave the
institution to work for Cernavoda or other industries that pay better
salaries. Romania is therefore encouraged to address this specific
issue and to further strengthen the resources and capabilities
of CNCAN within a stable framework.
The unresolved issues of spent fuel and nuclear waste will have
to be addressed in the short-term.
In order to ensure compliance with Euratom requirements and
procedures Romania should give due attention to preparing the
implementation of Euratom safeguards, in particular regarding the direct
reporting of nuclear material flows and inventories by the persons or
bodies operating nuclear installations or storing nuclear material .
Romania has concluded a Full Scope Safeguards Agreement with the
International Atomic Energy Agency.
Conclusion
In its 1997 Opinion, the Commission concluded that Romania had to step
up considerably its efforts in the energy sector in order to
prepare for integration. The following areas were identified as
requiring particularly close attention: the adjustment of monopolies;
energy pricing; emergency preparedness, including the building-up of
mandatory oil stocks; state interventions in the solid fuels
sector; and development of energy efficiency. The Commission added
that, although no major difficulties were foreseen for compliance
with the Euratom Treaty, Romania should implement some
international nuclear norms. Nuclear safety standards, especially those
related to plant operation, should be handled appropriately and
longer-term solutions needed to be found
for radioactive waste.
Since the Opinion, Romania has made progress in aligning itself with the
relevant acquis.
However, many structural issues still have to be addressed in
the energy sector. Legislative alignment is limited and the new
administrative structures remain to be consolidated. Negotiations on
this chapter continue. Romania should focus further efforts on
addressing the structural problems that are facing the sector:
non-payment of energy bills, restructuring of Termoelectrica, and
improving the efficiency of its energy networks. It should also move
away from its current energy production-oriented policy, and towards a
policy based on energy saving. Romania should take the necessary
measures to ensure the full and timely implementation of legislation in
the energy sector as well as strengthening the administrative capacity
of the newly established bodies (in particular the energy regulators,
the energy efficiency body and the nuclear safety authority). Romania
should ensure compliance with Euratom requirements and procedures and
take measures for the progressive building up of oil stocks.