REG - Soc EnergElectricaSA - Impact of legal and regulatory changes in Romania

Societatea Energetica Electrica SAAnnouncement

31/10/2022 16:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20221031:nRSe7842Ea&default-theme=true

RNS Number : 7842E  Societatea Energetica Electrica SA  31 October 2022

To:                              Bucharest Stock
Exchange (BSE)

                                    London Stock Exchange
(LSE)

Supervisory Authority (FSA)

 

Current report in compliance with the Law 24/2017 on issuers of financial
instruments and market operations, FSA Regulation no. 5/2018 on issuers of
financial instruments and market operations, and the Bucharest Stock Exchange
Code

Report date: 31 October 2022

Company name: Societatea Energetica Electrica S.A. (Electrica)

Headquarters: 9 Grigore Alexandrescu Street, 1(st) District, Bucharest,
Romania

Phone/fax no.: 004-021-2085999/004-021-2085998

Fiscal Code: RO 13267221

Trade Register registration number: J40/7425/2000

Subscribed and paid in share capital: RON 3,464,435,970

Regulated market where the issued securities are traded: Bucharest Stock
Exchange (BSE) and London Stock Exchange (LSE)

Significant events to be reported: Financial, budgetary, and operational
impact of GEO 119/2022, of ANRE Order no. 129/2022 and of OMFP 3900/2022

Electrica informs shareholders and investors about the financial and
operational impact analysis done by Electrica following the publication in the
Official Gazette (OG) of ANRE Order no. 129/2022 and of the OMFP no.
3900/2022, which represent the methodological norms of implementing GEO no.
119/2022 for amending and supplementing GEO no. 27/2022 on measures applicable
to the final clients on the electricity and natural gas market during 1 April
2022 - 31 March 2023, as well as for the amendment and supplementation of some
legal acts in the field of electricity.

We mention below the main aspects with financial, budgetary and operational
impact on the Group, on the distribution and supply segments:

·      On the distribution segment, the most important amendment is the
quarterly capitalization of the additional costs with the acquisition of
electricity, realized during 1 January 2022 - 31 August 2023, for covering the
network losses (NL), determined as the difference between the realized costs
and the costs included in the approved distribution tariffs. The capitalized
costs are being amortized on a five-year term from the date of capitalization
and are being remunerated with 50% of the regulated rate of return (RRR)
approved by ANRE, applicable on the amortization period of the respective
costs. These are recognized as a distinctive component in the regulated
tariffs, named component related to additional network losses costs.

In accordance with the provisions of art. III from GEO 119/2022, ANRE
elaborated the Methodological norms regarding the recognition in the tariffs
of the additional costs with the acquisition of electricity for covering the
network losses compared to the costs included in the regulated tariffs,
approved by ANRE Order no. 129/2022, published in the OG no. 1019/2022 on 19
October 2022. The purpose of these norms is to establish the substantiation of
additional costs with the purchase of electricity to cover the NL, as well as
the conditions for their recognition in the regulated income, based on which
the distribution tariffs are established.

 

From a financial accounting point of view, as a result of the changes
mentioned above from the point of view of GEO 119/2022 and of ANRE
regulations, in OG no. 1023 on 20 October 2022 was published the OMFP no.
3900/19 October 2022, which brings accounting clarifications to the accounting
regulations in force, supplementing OMFP 1802/2014 as well as OMFP 2844/2016,
provisioning for the financial treatment regarding the capitalization of the
network losses difference, as follows:

-     on the expenses side, the difference in NL between the purchase
price of electricity for covering the NL compared to the ex-ante purchase
price recognized by ANRE will not be reflected during the current financial
year, but will be reflected through the capitalization of some assets
(intangible) in the form of some intangible assets every quarter, starting
with 30 September 2022 until 31 August 2023, assets that will be amortized
using the straight-line method for a period of 5 years. These provisions will
have a positive impact on the income and expenses budget approved by the GMS
on 20 April 2022;

-     on the income side, the NL difference between the ex-ante value
recognized by ANRE and the value established through the annual calculation
algorithm will be recognized in the regulated income for a period of 5 years,
by increasing the distinct component of the distribution tariffs, related to
the additional NL costs, in accordance with ANRE methodologies. The
application of the limitations provided by the methodology of setting the
tariffs, regarding the annual increase of the tariffs, will be carried out
without considering the component related to additional network losses costs.

·      On the supply segment, the Group does not currently estimate a
significant financial impact of the provisions of GEO 119/2022, as in force at
this time, on the income and expenses budget approved by the GMS on 20 April
2022.

We mention the fact that the law of approval of GEO 119/2022 is currently in
parliamentary debates, and there is a possibility of the GEO being amended,
compared to the version that was analyzed, whose financial, budgetary and
operational impact was presented above.

We would like to inform investors of the fact that, simultaneously with the
publication of the Q3 2022 interim consolidated simplified financial
statements, prepared in accordance with OMFP 2844/2016, which, according to
the financial calendar will take place on 15 November 2022, in which the first
intangible asset for the difference in NL for the period 01 January 2022 - 30
September 2022 will be presented, we will also publish an estimate of the
impact on the 2022 consolidated income and expenses budget.

This will be available on the website www.electrica.ro
(http://www.electrica.ro) , in the dedicated section.

 

Abbreviations:

ANRE  = Romanian Energy Regulatory Authority, in Romanian Autoritatea
Nationala de Reglementare in domeniul Energiei

OMFP = Ordinance of the Public Finances Ministry, in Romanian Ordinul
ministrului finanţelor publice

GEO = Government Emergency Ordinance, in Romanian OUG, Ordonanta de Urgenta a
Guvernului

NL = Network losses, in Romanian CPT, Consum propriu tehnologic

OG = Official Gazette, in Romanian MOf, Monitorul Oficial

 

 

CEO
 

Alexandru - Aurelian Chirita

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCEASEFDEFAFFA