Electricity reform: What was wanted, What has been achieved and, How should reform show ?

Jean Constantinescu

Episode I: Vision, plan and launch of implementation

At 7 years from the extinction of centralized state economy, nothing announced a deep reform in the Romania's power sector. And yet, the strategy and reform committee (CSR) proposed a reform program for sustainable reconstruction of the sector within a liberalized  service environment. Power sector reform had to redefine the role of state in energy sector, create and consolidate the electricity market so that it discovers the real prices at the lowest possible levels, launch the technology upgrade and eliminate post - privatization risks, and increase the quality of energy service and energy affordability.
The CSR's reform program did not envisaged the state corporate governance, which had to be approached at the whole economy scale.

Episode II: How the main reform targets were missed

A number of success stories have followed indeed, including adherence to the UCTE system, completion of negotiations on Energy Chapter with the EU and discovery of real electricty prices, however the main reform targets have been missed. Electricty invoice is still unaffordable for a large part of the population and firms, and the expected investments in new technology have not materialized so far.

After EU accession, politicians have forgotten the commitments, trying even to deviate the energy reform towards centralized formulae. Instead of strengthening the market, the regulations have worsened price distortion. Investors have not been let to enter the "strategic sector", bureaucracy has increased and, in general, the "Road Map" has been forgotten.

Episode III: How should reform show

We need an economy of low and clean - sourced energy consumption and a trustworthy energy market as far as the citizens and enterprises are concerned. For economy and all social groups, electricity should become safe and affordable.

Not only targets should be estimated, but scenarios of evolution that maximize the social welfare on a time period long enough. It should be simulated the power system operation, articulated the priority projects, established the priorities of public financing, assessed the impacts of different incentives for private entrepreneurship, and defined the support schemes. Energy strategy may be discussed publicly and adopted consensualy by the Parliament. In this way, it will become an unavoidable source for programs and energy legislation of any government.

Key words: Romania, reform, power sector, reform program, restructuring, energy strategy, electricity.

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