The Commission seeks to determine whether Hidroelectrica has indirectly subsidized clients by selling them electricity at prices below market levels or by buying from them at prices above market levels, the statement noted.
“Indirect subsidies that reduce the normal operating costs of companies can be just as distortive of competition as outright grants. We have to check whether the preferential tariffs granted by Hidroelectrica put the clients that benefited from them on a better footing than their competitors in the internal market,” said Joaquín Almunia, Commission Vice-President in charge of competition policy.
Hidroelectrica is controlled by the Romanian state, and there are indications that the state might have influenced its decisions to engage in these contracts on the given terms, the Commission said.
Contracts between Hidroelectrica and eight electricity traders, some of which from 2004, and contracts between Hidroelectrica and two industrial manufacturers have been concluded at prices that appear to be lower than those prevailing on the market.
Conversely, in contracts with two thermoelectricity producers, Hidroelectrica bought electricity at prices which seem to be higher than market prices, the statement noted.
Additionally, in December 2009 and December 2010, following public auctions on the Romanian wholesale electricity market OPCOM, Hidroelectrica concluded two bilateral contracts with steel producer ArcelorMittal, each for the supply of 1.75 TWh of electricity per year, again at prices which seem to be below market levels.
Moreover, aluminum smelter Alro Slatina has an ongoing long-term contract with Hidroelectrica for the delivery of 3 TWh of electricity per year at a price very close to Hidroelectrica’s own production costs and subsequently indexed annually on the basis of the aluminum price quotation on the London Metal Exchange (LME), the Commission said.
“All these contracts therefore seem to have substantially benefited selected companies through the provision of funds which can ultimately be ascribed to the state, whereas their competitors had to pay the market prices,” it concluded.
Hidrolectrica is Romania’s largest power producer, covering around one third of the national energy output. The company delivers 70% of its energy output to industrial consumers.