Hidroelectrica, the biggest and cheapest local energy producer, officially explains the reasons for signing the direct power supply contracts with the so-called “smart guys” for very long terms and at half the price operated on the energy exchange: to get funds for investments and loans from banks.
The company took out 165 million euros from banks and had 1.6 billion euros for investments over the last five years from these direct contracts alone, which are considered unprofitable for the state because of the low price at which they were signed.
From 2001 through 2004 Hidroelectrica signed a series of a direct contracts with energy traders among which Energy Holding, Luxten Lighting, Electromagnetica, Alro and others, with 73% of the hydroelectric power to go to fill such contracts this year.
Had it sold all this power on the OPCOM exchange, Hidroelectrica would have got about half a billion euros this year alone. Instead, revenues could be about 50% lower, considering the value of two of the contracts that were made public, i.e. the contract with Luxten and Electromagnetica.
What were the official reasons for singing these contracts?
“The average annual cost to produce hydroelectric power was higher than the average annual rate regulated for this period (2001-2009). It should be noted that from 2002 through 2004 it was up to three times higher,” say representatives for the power producer, adding that the first contract signed on the competitive market was with a domestic eligible consumer in 2001.
Considering that the power sold exclusively to individual customers used to be delivered at a price lower than the production cost, Hidroelectrica says that this gap was covered, as well as profit made on the competitive market, where prices were two to five times higher than on the regulated market.
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