INTERVIEW George Niculescu, new head of National Energy Regulator ANRE: More than…

Sursa foto: Sabin Cîrstoveanu / Inquam Photos

INTERVIEW George Niculescu, new head of National Energy Regulator ANRE: More than €1.3 billion in electricity transmission infrastructure funds / NRRP boosts renewable generation / What he says about crony hirings and reorganisation of the institution

George Niculescu (PNL), the new president of the National Energy Regulatory Authority – ANRE, says in an interview with G4Media that data shows that a new energy bill crisis is not expected next winter. Asked about the accelerated transition to electricity, Niculescu announces investments of more than €1.3 billion in energy transmission and distribution lines.

He admits that the 180 extra posts in the ANRE provided for in a draft law are „a bit much”. Asked about the dozens of people hired on huge salaries in recent years, George Niculescu says he will make an assessment of the institution.

George Niculescu’s main statements:

  • I found out about the bill in Parliament the moment I came to the authority. I tend to think that 180 posts are a bit too many, I don’t see the need.
  • I am in the process of evaluating the work of each directorate and compartment
  • We are seeing the appetite for investment in renewable energy generation coming through again in this period, stimulated by the funds from the NRRP and the Modernisation Fund
  • The multiannual scheme of around €1.2 to €1.3 billion through which distribution operators can finance their transmission line development projects
  • Distribution operators have problems with the equipment needed to install prosumers: meters
  • Romania to become the first country in the region to install wind power plants in the Black Sea

Rep: We’ll start with a little anecdote about the institution you’ve been running for a very short time. A lot of people who come to work at ANRE say they start to feel like they’re in a fancy club, Bamboo or Nuba. It has to do with a reality that has been widely described in the press: the many cases of hiring on the basis of political connections of young men and women who have nothing to do with energy. It is not only the way in which these people are hired that is disturbing, but also the salaries on which they are hired. How do you intend to solve this problem of overpopulating the institution with people who don’t belong here?

George Niculescu: I can assure you that, although our dialogue started with a joke, an anecdote, I tend to take things very seriously in terms of the issues you mentioned earlier. I want to tell you that in no way in the ANRE is there an atmosphere like that of the fancy clubs you mentioned.

Wherever I have worked, whether in the private sector, local or central government, I have been oriented towards directing the institution towards performance. As prefect I tried to restore these institutions to the role they had, in the sense that communication with citizens and local authorities was very important, especially for the pandemic period.

I intend to do the same here. Indeed, the social problems that Romania is experiencing somehow call into question the level of salaries in certain public institutions…

Rep: Really, what is the average salary in ANRE?
George Niculescu: I wouldn’t know what the average gross salary is. I don’t want to give wrong figures. They are above average salaries, I can confirm that.

Rep: We have the example of a young woman hired last year in the office of the former president, a fresh graduate, with a monthly income of 3,000 euros net.
George Niculescu: It is possible, I don’t deny that.

Rep: In view of this huge discrepancy between some incomes at ANRE and the incomes of teachers and health professionals, are you considering a reorganisation of the institution?
George Niculescu: I think that more important is the work of the people in the institution. I would like that – as you said, the salaries are generous – the work of the people in the institution should be commensurate. The purpose of the authority is to regulate the energy market. My colleagues in the authority come into contact with their counterparts in the various companies that we regulate and check their activity. The control or investigation teams come and investigate the biggest players in the Romanian energy market, companies with very high turnover and very high payrolls. In order to have a good and correct activity in this field, it is obvious that we need to attract professional specialists and we can do this with these attractive salaries.

That there are cases that you mention with people who would not fit this profile, I would not like to comment.

Rep: There are several examples: Roxana Ilie, Marina Claudia Răduinea, Alexandra Dinulescu. A lot of ladies and gentlemen.
There is another aspect besides the salary issue. Compared to France, which has only 155 employees, Romania’s ANRE now has 355, and there is a bill in Parliament to increase it to 550. I’ll give you some more figures: Finland has 82, Austria 114, Belgium 69. What are 355 employees doing in Romania?

George Niculescu: I am also looking at the organisation charts of the regulatory authorities in other countries, first of all, to see the activities, how they are distributed, to take an example in terms of the good arrangement of directorates and departments. If I see a reorganisation, I see it in the sense that it will lead ANRE towards the good results that I want.

The energy market in Romania has only recently been liberalised, we have seen a lot of things happen in a very short time in the energy market. Now, ANRE’s work encompasses more things than the authority did originally. In addition to the investigative activities, the control activities, the regulatory activities, the gas and electricity tariff compartments, we also have the activities that flow from the emergency ordinances on the capping and compensation of bills, ordinances 118, 27, 119. These regulations also set ANRE tasks, in the sense that the authority and my colleagues verify all the declarations submitted by suppliers on the weighted average price of electricity and natural gas. This is not an easy task, it comes with a lot of responsibilities, because it is on the basis of these verifications that the payments from the Ministry of Energy and the Ministry of Labour are made… And this task is until 31 May 2025.

I found out about the bill in Parliament when I came to the authority. I tend to think however that 180 posts is a bit much, I don’t see the need for it.

I am in the process of evaluating the work of each directorate and compartment, and depending on these evaluations we will see how we will reorganise this institution. This reorganisation will follow the outcome.

Rep: When will you complete this evaluation of the institution?
George Niculescu: I don’t necessarily mean an evaluation, it’s more a determination of the willingness to work, to see exactly what is the effort capacity of people, the degree of involvement in projects. There are many things that need to be done at the moment on several lines.

Rep: So you’re not considering a possible reorganisation and a reduction of the current staffing scheme of 360 people?
George Niculescu: Let me be honest with you, I didn’t think that at the moment the work of the authority and the objectives we have would lead to a reduction of the staffing. But I look at how the other authorities are organised, I look at the way the directorates are put together and I also keep an eye on the work of my colleagues in the authority, their willingness to get involved and their ability to work, because very important for me are the results.

Rep: One last question on internal organisational issues. Did you agree, as head of the institution, with the employment of Dumitru Chiriță, former president of ANRE, as an advisor in the cabinet of a vice-president. Why did you agree to bring the former president into the institution as an advisor? Such a move contradicts any management principle, because he, normally, given the power network he has built within the institution, could put the brakes on you, could question certain decisions you take as president.
George Niculescu: You said very well that it could. This request obviously comes from Mr. Chiriță’s desire to remain in the institution as an advisor to the cabinet of a vice-president. This desire was also reinforced by the Vice President’s request to have a person with whom I understand they have a good relationship, a person who could somehow help him through this transition period of taking over as Vice President and adjusting to the duties and obligations that he has as Vice President. Somehow he wanted a person who would make it easier for him to settle into the institution. What is also very important to remember is that at the moment, whether some people like it or not, the chairman of the authority is George Niculescu.

I believe that colleagues in the institution have understood that time cannot go backwards, and for the next 5 years our work is closely linked.

Rep: Romania is racing against the clock on the energy transition and is suffering from a chronic lack of investment in electricity transmission capacity. As the regulator of the energy market, how do you force Transelectrica and electricity distributors to invest in these transmission lines? In five years’ time, the number of electric cars in a city like Bucharest will probably be three to five times higher than it is now and more transmission and distribution capacity will be needed.
George Niculescu: Obviously the energy transition is an irreversible process. We can’t go back to traditional forms of production. We want to increase the renewable energy component and to do this, the Romanian state has taken several measures over the years. Between 2012 and 2016, law 220 promoted a modified green certificate support system, but it was too often modified, which suddenly cut investors’ appetite. We see the appetite emerging again in this period, stimulated by funds from the NRRP and the modernization fund, money that is available to investors to build, install new renewable generation capacity.

However, without reinforcing the transmission networks and, as a subsidiary, the distribution networks – because not all producers are building capacities of over 50 megawatts – we cannot talk about production and, obviously, consumption.

The Ministry of Energy had in 2021 a funding of 23-24 million euros, also from the Modernisation Fund, for the development of a new transmission line between Constanta and Medgidia. We know that traditionally, the Dobrogea area has been swarming with renewable energy production projects. If we add that we also have two nuclear reactors, wind power, the 600 megawatt Cogealac – Fântânele park, and then the most mature project was to evacuate Dobrogea by building this line.

As a continuation of this program, they contracted 420 – 425 million euros also from the Ministry of Energy, through the Modernization Fund, precisely to strengthen these capacities.

On the distribution side, the amounts are even higher. This is a multiannual scheme of around EUR 1.2 to 1.3 billion, which allows distribution operators to finance projects to develop transmission lines and to strengthen existing ones.

Rep: But does ANRE make it so that these distributors, as well as Transelectrica, are obliged to invest in these developments?
George Niculescu: We had a meeting last week of over 3 hours with the distribution operators, and one of the points of discussion was exactly that. My position was not a soft one at all, because I believe that any postponement of the decision to submit projects to be financed from these amounts, especially since they are non-reimbursable funds, is a missed opportunity.

The alternative is to finance these investments from their own budgets, which obviously comes at a cost that will eventually make its way into the distribution tariff.

All the distributors have assured me that they already have projects submitted. The value of the projects submitted I think exceeds 6 million euros. At the moment, the only tool we have when we talk about a new regulatory period and setting distribution tariffs is to look very carefully at their investment projects and see how much of it we recognise under the regulated assets.

But I think the distribution operators will not miss this opportunity. I want to believe that the distribution operators have understood very clearly that this is an opportunity that they cannot miss.

Rep: Given the evolution of the car market, but also the other changes in the energy markets, do you think there is a real danger that Bucharest or other big cities like Cluj, Constanta, Timisoara will have problems with electricity supply because of lack of investment in transmission and distribution lines?
George Niculescu: I don’t have an analysis on this subject, but we can look at it from another point of view and see that it is a challenge at the moment. We are already facing a challenge and that is from the large number of prosumers who are setting up and who want to deliver energy. So the challenge is already there, but from the other perspective, that of the person who wants to deliver energy.

Obviously, if consumption were to increase because of the emergence of more electric cars and more charging stations, somehow from this perspective the overproduction would somehow find a consumption, things would be more balanced, so I see that a solution to the current challenge may also be to increase consumption because of the large number of electric cars.

Rep: But why are there problems now with prosumers? We’ve all seen that there are a lot of voices in the market saying that they can’t not connect to the grid.

George Niculescu: Yes, I see these problems too since I got to ANRE. The intention of the Ministry of Energy – I remember that Ordinance 143 was adopted on 28/12/2021, we basically transposed a European directive when I was Secretary of State at the Ministry and we introduced this term of prosumers and the term of settlement, of quantitative compensation, so as to stimulate, to help people, to motivate them in a way to become prosumers, basically to install these photovoltaic panels on their houses to reduce their electricity consumption. The measure is a measure to promote energy efficiency.

There is this problem. As the price of electricity has risen, we have seen a boom in these investments. More and more people wanted to become prosumers. Faced with this situation, I can tell you quite openly that the distribution operators were not prepared, even though the regulatory framework was in place, even though the primary law gave a general framework and legislated for this. The distribution operators still have problems in terms of the equipment needed to install these prosumers, I am referring here to the metering units, the metering devices. They are sometimes rightly using such arguments to deal with these requests, because of the long time it takes to connect an prosumer.

Rep: Have you sanctioned any operators?
George Niculescu: There have been sanctions since the beginning of the year. There are several controls started and completed, the amount of fines amounting to 30,000 lei.

Rep: Practically nothing for operators with turnover often in the hundreds of millions of lei, 30,000 lei is an extremely low amount. Are you considering other types of penalties for these operators who do not allow consumers to be connected to the network?
George Niculescu: First of all, the authority does not necessarily aim to sanction. Obviously, if these cases are not closed, the colleagues from the control directorates will come back, and for successive offences, fines can be imposed as a percentage on turnover.

Rep: Another project is offshore wind farms. In addition to what you have already said about investments in transmission lines, do you think additional investments are needed? Do you have any analysis on what is needed to accommodate this new generation, when will it be?
George Niculescu: This is a subject that I like very much. I am also from Constanta, and at the Ministry of Energy I was in charge of the draft legislation that will regulate offshore operations in the Black Sea. At the Ministry of Energy, I saw that there is no framework to legislate these operations. The question was which institution issues construction permits, who issues the permit, who issues a town planning certificate for such investments. Together with experts from the World Bank and together with experts from the Bureau of Oceanic Management in Washington, we had countless video meetings with them, in which we tried to get as much information as possible. When I left the Ministry of Energy, about 90% of the draft was ready. My colleagues in the Ministry, who are still working on the draft, are very close to finalizing it. I think they are still waiting for views from some relevant institutions – Transelectrica, etc. to integrate them into the draft.

The World Bank has been a great help to us, we did a study tour with them in Constanta to make an assessment in terms of the activity that the port of Constanta can have in this context, in which Romania becomes the first – because that is what is at stake, Romania to become the first country in the region to install these capacities. This is very important for us.

Rep: And what does it have to do with the Port of Constanta?
George Niculescu: The specialists from the World Bank told us that every area in Europe that develops such projects needs a healthy port. Depending on the characteristics of the port, it can have equipment production capacities. It can be an assembly point, where it can be assembled and delivered to projects in the Black Sea. Or it can play the role of an operation and maintenance port for all Black Sea projects, not just those in Romania. I mean, the Port of Constanta could be the port that will host these companies that will operate and maintain the turbines in the Black Sea.

In this race, let’s not be naive to think that our neighbours in Bulgaria are not very interested in offshore wind. Let’s not imagine that after the end of the war the Ukrainians won’t also look at this source of production, because the wind potential is greater in the northern Black Sea.

I am sure that more countries will want to access this potential that the Black Sea has. And if companies come to Romania to produce, assemble equipment and do operation and maintenance, they will not leave Constanta to open a branch in Varna when a project is built in Bulgaria’s economic zone, 70km south of Constanta.

So that is why it is important that Romania is the first country to have this primary framework of legislation, investors are the first to be in Romania and start their activities here.

In terms of taking over electricity, obviously there will be challenges. Obviously on a congested area there is already an overlay of this new generation capacity. We also have to take into account that, according to the specialists at the World Bank, from the moment you have the legislation ready to the moment you take over such a project, it takes about 7-8 years, so it is a long, hard procedure.

At the moment, from the information I have, any order for wind turbines takes a very long time to be delivered. All of Europe wants to build such projects onshore or offshore and then manufacturers have problems delivering the equipment. Also, project development is more cumbersome in all respects than an onshore project. That’s why specialists from the World Bank told us that it takes 6 to 8 years from the time you have the legislation ready until you take delivery of the project.

In this period of time, I believe that the transmission operator needs to strengthen its transmission capacities to evacuate energy from the south-east of Romania in the Dobrogea area to the consumption areas. And we also have the interconnection project between Azerbaijan, Georgia, Romania and Hungary, signed on 17 December in Cotroceni, which foresees an electricity transmission corridor from the Caspian Sea area via a direct current cable through Romania to Hungary in order to supply the European markets. This infrastructure could represent an opportunity for us, in the sense that volumes of offshore wind energy could be integrated through this cable.

Rep: The situation by county in terms of renewable energy take-up capacity. Here’s a big industry offering. There are many who complain about ANRE’s lack of transparency, because nobody knows at this moment what more power can be installed in Iasi county, Teleorman, Ialomita or Constanta. When will you make this data transparent so that it is accessible to any potential investor?
George Niculescu: Let me use Transelectrica as an example in this respect. Transelectrica has been publishing on its website for 2 years now the available injection capacity for each area and we see that in some areas, until 2025, you cannot integrate even one megawatt into the networks operated by Transelectrica.

In other areas, you can inject installed capacity of over 1000 megawatts into the grid, and investors have a map at their fingertips that tells you in real time what is still available on the grid. I think this is a good example. I wish we had the same thing implemented on the distribution operator side, each with their own distribution area.

I will see if, through secondary legislation, by order of ANRE, we have the possibility of imposing this on the distribution operators without affecting their activity in any way, following the model of the transmission operator, in an attempt to make it transparent and to help the investor who wants to do this, I can tell you that we will do so.

Rep: You know that there is talk in the market of corruption in the granting of permits for new projects because of this lack of transparency. There are those who have access to information and those who don’t have access to information
George Niculescu: … and then somehow they speculate this, they try to monetize this information. Obviously I will have a discussion with the distribution operators, I will also have a discussion with my colleagues in order to identify how the authority can impose this on them. I know that Transelectrica has done this voluntarily. It was a management decision to make this information transparent. If the distribution operators are somehow reluctant to take this decision on their own, maybe we can find a way within the authority to implement this, because I believe that the information should be available to the one who wants to use it in a fair way.

Rep: You have announced that you have found a project for a photovoltaic park with a higher power than that of a unit at Cernavodă to be authorised by ANRE. What stage is the project at?
George Niculescu: In order to become a producer of electricity from renewable sources, you need an establishment permit and a producer license from the regulator. They are at the stage where they have applied for the establishment permit, they have submitted the documents, their file is under analysis at the moment.

Rep: Where will it be located?
George Niculescu: In the west of the country. Information about the location of the park has already appeared in the media. I have been somewhat reluctant to make more statements on the subject. I would like to talk more when the permit is issued by and more to talk about this project when it will be built and will deliver energy to the grid.

It is a very large project, 1043 megawatts means about 1000 hectares of land on which this park will be located. You realize the complexity of the connection solution, I think it’s a very important infrastructure work there to evacuate this large amount of electricity. Obviously in the western part of the country we have relatively high consumption, the area is heavily industrialised, we see many industrial parks in that area and then this energy I think will be transported and distributed over shorter lengths of grid, so it will reach the consumer faster.

Somehow it’s an attempt to balance the energy production, which at the moment is very much concentrated in the south-east of the country.

Rep: Are you expecting an energy bill crisis this winter?
George Niculescu: At the moment, the trend in prices – for electricity and natural gas – is downwards. We see that trading prices are going down. If we also add the fact that Emergency Ordinance 27, which capped and set the price at which domestic and non-household consumers pay their gas and electricity bills, is in force until 2025, if we also refer to the high level of filling of natural gas deposits, I think we will not have problems.

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